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Advanced Auto Parts Q2 Preview: Another EPS Beat Inbound?

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The Zacks Retail and Wholesale Sector has been scorching hot over the last month, increasing by more than 13% in value and outperforming the S&P 500 by a fair margin. However, the sector is still deep in the red YTD.

A big-time player in the sector, Advanced Auto Parts (AAP - Free Report) , is on deck to reveal Q2 results on Tuesday, August 23rd, after market close.

Advanced Auto Parts primarily sells replacement parts (excluding tires), accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy-duty trucks.

In addition, the company sports a Zacks Rank #3 (Hold) with an overall VGM Score of a B. How does the auto retailer stack up heading into its print? Let’s take a closer look.

Share Performance & Valuation

Year-to-date, Advanced Auto Parts shares have struggled, losing 12% in value and marginally underperforming the S&P 500.

Zacks Investment Research
Image Source: Zacks Investment Research

However, over the last month, AAP shares have posted market-beating returns, tacking on an impressive 9% in value.

Zacks Investment Research
Image Source: Zacks Investment Research

Additionally, the company carries enticing valuation levels, further bolstered by its Style Score of a B for Value. AAP’s 15.4X forward earnings multiple is well beneath its five-year median of 18.8X and represents a steep 43% discount relative to its Zacks Sector.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

A singular analyst has lowered their earnings outlook for the quarter to be reported over the last 60 days. Still, the Zacks Consensus EPS Estimate of $3.75 reflects a double-digit 10.3% Y/Y uptick in quarterly earnings.

Zacks Investment Research
Image Source: Zacks Investment Research

AAP’s top-line appears to be in excellent health as well – the company is forecasted to have generated $2.8 billion in revenue throughout the quarter, penciling in a modest 3.7% year-over-year uptick.

Quarterly Performance & Market Reactions

Advanced Auto has consistently reported strong bottom-line results, exceeding the Zacks Consensus EPS Estimate in five consecutive quarters. Just in its latest print, the auto retailer registered a 1.1% bottom-line beat.

Top-line results have also been rock-solid, with AAP recording eight top-line beats over its last nine quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

In addition, the market hasn’t reacted well in response to AAP’s previous three quarterly prints, with shares moving down following all three.

Putting Everything Together

AAP shares still reside in the red year-to-date, but buyers have stepped up significantly over the past month, driving shares upwards.

Furthermore, the company sports solid valuation levels, with shares trading well below their five-year median and nowhere near their Zacks Sector.

A singular analyst has lowered their outlook for the quarter, but estimates still reflect strong growth on both the top and bottom-lines.

The company has consistently beaten quarterly estimates, but the market hasn’t reacted well as of late following its quarterly prints.  

Heading into the release, Advanced Auto Parts (AAP - Free Report) carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of 0.5%.


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