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Will Advance Auto's (AAP) Q4 Earnings Disappoint Investors?
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Advance Auto Parts (AAP - Free Report) is slated to release fourth-quarter 2022 results on Feb 28, before market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $2.41 and $2.42 billion, respectively.
For the fourth quarter, the consensus estimate for AAP’s earnings per share has moved down by 2 cents in the past seven days. Its bottom-line estimates imply a rise of 16.43% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 1.04%. Over the trailing four quarters, AAP surpassed earnings estimates on two occasions and met the same once and missed on the other, with the average negative surprise being 2.06%. This is depicted in the graph below:
In third-quarter 2022, AAP’s adjusted earnings per share of $2.84 missed the consensus mark of $3.32. The bottom line declined 11.5% year over year. The company generated net revenues of $2,641.3 million, falling short of the Zacks Consensus Estimate of $2,652 million but edging up 0.8% from the year-ago reported figure. Comparable same-store declined 0.7%.
Factors to Shape Q4 Results
AAP is focused on opening new stores. Its revenues for the to-be-reported quarter are likely to have benefited from its expanded foothold. The Zacks Consensus Estimate for the total number of retail stores at the fourth quarter-end is pegged at 5,094, indicating a rise from the year-ago quarter’s store count of 4,972. However, weak comps growth might have clipped sales. The Zacks Consensus Estimate for 2022 comparable store sales suggests a decline of 1.10% versus growth of 8.2% in the corresponding quarter of 2021.
Further, intensive expansion is escalating the selling, general and administrative (SG&A) costs of Advance Auto Parts, which are limiting the firm’s margins. In the third quarter, adjusted SG&A expenses increased 5.4% year over year to $989.3 million. The trend is expected to have continued amid huge costs for store openings, partnerships and investments to strengthen the supply chain, straining the firm’s third-quarter profits.
Further, escalating costs of raw materials amid a shortage of components might have clipped margins. Inefficiencies in the distribution infrastructure, difficult labor environment and global logistics challenges are likely to have weighed on its fourth-quarter performance.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Advance Auto Parts for the quarter to be reported, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: AAP has an Earnings ESP of -5.25%. This is because the Most Accurate Estimate is 13 cents lower than the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
AutoZone will release fiscal second-quarter 2023 results on Feb 28. The company has an Earnings ESP of -1.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AutoZone’s to-be-reported quarter’s loss and revenues is pegged at $21.33 per share and $3.54 billion, respectively. AZO surpassed earnings estimates in the trailing four quarters with an average surprise of 13.1%.
O’Reilly reported fourth-quarter 2022 results on Feb 8. Adjusted earnings per share of $8.37 surpassed the Zacks Consensus Estimate of $7.71. Higher-than-expected comps growth resulted in the outperformance. Comps grew 9% in the reported quarter and topped the Zacks Consensus Estimate of 4.07%. The bottom line increased 10% from $7.64 in the prior-year quarter.
The automotive parts retailer registered quarterly revenues of $3.64 billion, crossing the consensus mark of $3.51 billion. The top line was 11% higher than the prior-year figure of $3.29 million. During the quarter, O’Reilly opened 20 new stores in the United States and 14 in Mexico. The total store count was 5,971 as of Dec 31, 2022.
Image: Bigstock
Will Advance Auto's (AAP) Q4 Earnings Disappoint Investors?
Advance Auto Parts (AAP - Free Report) is slated to release fourth-quarter 2022 results on Feb 28, before market opens. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $2.41 and $2.42 billion, respectively.
For the fourth quarter, the consensus estimate for AAP’s earnings per share has moved down by 2 cents in the past seven days. Its bottom-line estimates imply a rise of 16.43% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 1.04%. Over the trailing four quarters, AAP surpassed earnings estimates on two occasions and met the same once and missed on the other, with the average negative surprise being 2.06%. This is depicted in the graph below:
Advance Auto Parts, Inc. Price and EPS Surprise
Advance Auto Parts, Inc. price-eps-surprise | Advance Auto Parts, Inc. Quote
Q3 Highlights
In third-quarter 2022, AAP’s adjusted earnings per share of $2.84 missed the consensus mark of $3.32. The bottom line declined 11.5% year over year. The company generated net revenues of $2,641.3 million, falling short of the Zacks Consensus Estimate of $2,652 million but edging up 0.8% from the year-ago reported figure. Comparable same-store declined 0.7%.
Factors to Shape Q4 Results
AAP is focused on opening new stores. Its revenues for the to-be-reported quarter are likely to have benefited from its expanded foothold. The Zacks Consensus Estimate for the total number of retail stores at the fourth quarter-end is pegged at 5,094, indicating a rise from the year-ago quarter’s store count of 4,972. However, weak comps growth might have clipped sales. The Zacks Consensus Estimate for 2022 comparable store sales suggests a decline of 1.10% versus growth of 8.2% in the corresponding quarter of 2021.
Further, intensive expansion is escalating the selling, general and administrative (SG&A) costs of Advance Auto Parts, which are limiting the firm’s margins. In the third quarter, adjusted SG&A expenses increased 5.4% year over year to $989.3 million. The trend is expected to have continued amid huge costs for store openings, partnerships and investments to strengthen the supply chain, straining the firm’s third-quarter profits.
Further, escalating costs of raw materials amid a shortage of components might have clipped margins. Inefficiencies in the distribution infrastructure, difficult labor environment and global logistics challenges are likely to have weighed on its fourth-quarter performance.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Advance Auto Parts for the quarter to be reported, as it does not have the right combination of the two key ingredients. A 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. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: AAP has an Earnings ESP of -5.25%. This is because the Most Accurate Estimate is 13 cents lower than the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 4 (Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Updates
AAP’s peers include AutoZone (AZO - Free Report) and O’Reilly Automotive (ORLY - Free Report) .
AutoZone will release fiscal second-quarter 2023 results on Feb 28. The company has an Earnings ESP of -1.13% and a Zacks Rank #3.
The Zacks Consensus Estimate for AutoZone’s to-be-reported quarter’s loss and revenues is pegged at $21.33 per share and $3.54 billion, respectively. AZO surpassed earnings estimates in the trailing four quarters with an average surprise of 13.1%.
O’Reilly reported fourth-quarter 2022 results on Feb 8. Adjusted earnings per share of $8.37 surpassed the Zacks Consensus Estimate of $7.71. Higher-than-expected comps growth resulted in the outperformance. Comps grew 9% in the reported quarter and topped the Zacks Consensus Estimate of 4.07%. The bottom line increased 10% from $7.64 in the prior-year quarter.
The automotive parts retailer registered quarterly revenues of $3.64 billion, crossing the consensus mark of $3.51 billion. The top line was 11% higher than the prior-year figure of $3.29 million. During the quarter, O’Reilly opened 20 new stores in the United States and 14 in Mexico. The total store count was 5,971 as of Dec 31, 2022.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.