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Advance Auto Parts (AAP) Warming Up to Q2 Earnings: What to Expect?

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Advance Auto Parts, Inc. (AAP - Free Report) is slated to announce second-quarter 2021 results on Aug 24, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $2.96 per share on revenues of $2.6 billion.

This aftermarket auto parts distributor delivered better-than-anticipated earnings in the last reported quarter on higher-than-expected comparable store sales growth.
Over the trailing four quarters, Advance Auto Parts surpassed estimates on three occasions and missed in the other — the average beat being 15.1%. This is depicted in the graph below:

Advance Auto Parts, Inc. Price and EPS Surprise

Advance Auto Parts, Inc. Price and EPS Surprise

Advance Auto Parts, Inc. price-eps-surprise | Advance Auto Parts, Inc. Quote

Which Way are the Estimates Headed?

The Zacks Consensus Estimate for Advance Auto Parts’ second-quarter earnings per share has been revised upward by five cents in the past seven days to $2.96. Moreover, this compares favorably with the year-ago quarter’s earnings of $2.92, indicating a 1.37% improvement, year on year. Further, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 3.98%.

Earnings Whispers

Our proven model predicts an earnings beat for Advance Auto Parts this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.

Earnings ESP: Advance Auto Parts has an Earnings ESP of +13.22%. This is because the Most Accurate Estimate is pegged 39 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Advance Auto Parts currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors at Play

Demand for vehicles was robust during the second quarter of 2021 amid sustained recovery of economy buoyed by widespread vaccination drive and improved fiscal stimulus. This, in turn, is anticipated to have boosted demand for automotive replacement parts, accessories, batteries and maintenance items. This is likely to have buoyed Advance Auto Parts’ bottom line during the quarter under review.
Advance Auto Parts is likely to have gained from the digital ramp-up and rising e-commerce initiatives during the second quarter. The firm’s significant advancement on its DIY omni-channel digital platform is anticipated to have fueled its earnings during the to-be-reported quarter. Further, enhancements to the firm’s online portal ‘MyAdvance’ is expected to have increased traffic and resulted in higher conversion rates, which is likely to have boosted revenues during the quarter in discussion.

Advance Auto Parts — peers of which include OReilly Automotive Inc (ORLY - Free Report) , CarMax Inc (KMX - Free Report) and AutoZone Inc (AZO - Free Report) — is anticipated to have benefited from its strengthening foothold through the opening of new stores during the quarter in discussion. Notably, the Zacks Consensus Estimate of the total number of retail stores at the end of the second quarter is pegged at 5,002, up from the first quarter’s store count of 4,791 and year-ago quarter’s store count of 4,819.

Advance Auto is also undertaking several initiatives to strengthen and streamline its supply chain to meet the evolving need of customers. The cross-banner replenishment and warehouse management systems integration initiatives are likely to have buoyed the company’s margins during the quarter under review.