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Advance Auto (AAP) Beats Q4 Earnings Estimates, Hikes Payout

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Advance Auto Parts, Inc. (AAP - Free Report) reported adjusted earnings of $2.07 per share for fourth-quarter 2021 (ended Jan 1, 2022), increasing 17.6% from the prior-year figure. The reported figure also beat the Zacks Consensus Estimate of $1.97 on higher-than-expected comps growth. For the fourth quarter, comparable store sales witnessed 8.2% growth, outpacing the consensus mark of 4.76%. Advance Auto generated net revenues of $2,397 million, topping the Zacks Consensus Estimate of $2,362 million and edging up 1.3% from the year-ago reported figure.

Adjusted operating income was up 24.8% year over year to $176.8 million. Adjusted selling, general and administrative expenses totaled $946 million for fourth-quarter 2021, up 10% year over year.

Advance Auto Parts, Inc. Price, Consensus and EPS Surprise

Advance Auto Parts, Inc. Price, Consensus and EPS Surprise

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

Financial Position

Advance Auto had cash and cash equivalents of $601.4 million as of Jan 1, 2022 compared with $835 million on Jan 2, 2021. Total long-term debt was $1,034.3 million as of Jan 1, 2022, slightly up from $1,033 million on Jan 2, 2021. In 2021, AAP generated operating cash flow and FCF of $1.1 billion and $822.6 million, up 14.7% and 17.1%, respectively, on a year-over-year basis.

Dividend & Share Repurchase

On Feb 14, Advance Auto Parts’ board approved a 50% hike in its quarterly cash dividend. The dividend of $1.50 a share would be payable on Apr 1, 2022 to all common shareholders of record as of Mar 18, 2022.

In 2021, AAP — which currently carries a Zacks Rank #3 (Hold) — repurchased around 4.6 million shares for $886.7 million at an average price of $192.92 per share. At the end of fourth-quarter 2021, AAP had $545.5 million remaining under the share-repurchase program. A few days back, AAP authorized a new $1-billion share repurchase program, underpinning its commitment to maximize shareholder value. 

Store Update

As of Jan 1, 2022, AAP operated 4,706 stores and 266 Worldpac branches in the United States, Canada, Puerto Rico, and U.S. Virgin Islands. It also served 1,317 independently-owned Carquest-branded stores across these locations, in addition to Mexico and various Caribbean Islands.

Guidance for 2022

Advance Auto estimates 2022 net sales in the band of $11.2-$11.5 billion. Comparable store sales growth and adjusted operating income margin are envisioned in the range of 1-3% and 10-10.2%, respectively. Advance Auto expects capex in the $300-$350 million range and targets FCF of a minimum of $775 million. Adjusted EPS is forecast between $13.20 and $13.75. The auto parts retailer intends to buy back stocks worth $500-$700 million. AAP aims to open 125-150 new stores this year.

Peer Comparison

Advance Auto’s key peers include O’Reilly Automotive (ORLY - Free Report) , AutoZone (AZO - Free Report) and CarMax (KMX - Free Report) .

O’Reilly posted fourth-quarter 2021 results on Feb 9. It posted adjusted earnings per share of $7.64, surpassing the Zacks Consensus Estimate of $6. The bottom line also increased from $5.40 a share recorded in the prior-year quarter. The company surpassed the Zacks Consensus Estimate for earnings in the last four quarters, with an average surprise of 22.2%. 

ORLY registered quarterly revenues of $3,291.5 million, beating the consensus mark of $3,066.7 million. The top line was also 16.36% higher than the prior-year figure of $2,828.8 million. The stock currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

AutoZone reported first-quarter fiscal 2022 (ended Nov 20, 2021) results on Dec 7. Its quarterly earnings of $25.69 per share surged from the prior-year figure of $18.61. The bottom line also surpassed the Zacks Consensus Estimate of $20.83. The company surpassed the Zacks Consensus Estimate for earnings in the last four quarters, with an average of 23.2%. 

AZO’s sales in the last reported quarter grew 16.3% year over year to $3,668.9 million. The top line also outpaced the Zacks Consensus Estimate of $3,358 million. Domestic same-store sales for first-quarter fiscal 2022 rose 13.6%, handily beating the Zacks Consensus Estimate of 3.9%. The stock currently carries a Zacks Rank #3.

CarMax reported third-quarter fiscal 2022 (ended Nov 30, 2021) results on Dec 22. Its adjusted earnings per share of $1.53 beat the Zacks Consensus Estimate of $1.48 and rose from $1.42 recorded in the year-ago period. The company surpassed the Zacks Consensus Estimate for earnings in three of the trailing four quarters and missed once, with an average surprise of 14.3%. 

KMX registered revenues of $8,527.8 million for the November-end quarter, beating the Zacks Consensus Estimate of $7,891 million. Also, the top line recorded a 64.5% year-over-year increase. The stock currently carries a Zacks Rank #3.