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Advance Auto Parts (AAP) Up 0.3% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Advance Auto Parts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Advance Auto Q1 Earnings & Revenues Miss Estimates
Advance Auto delivered adjusted earnings of 72 cents per share in first-quarter 2023, down 68.1% from the year-ago quarter's figure. The reported figure fell short of the Zacks Consensus Estimate of $2.60 per share. Advance Auto generated net revenues of $3,417.6 million lagged the Zacks Consensus Estimate of $3,427 million, but increased 1.3% year over year.
Comparable store sales dropped 0.4%. Operating income plunged 55.7% year over year to $90 million. SG&A expenses totaled $1,380 million for first-quarter 2023, up 5.9% year over year.
Financial Position
Advance Auto had cash and cash equivalents of $226.4 million as of Apr 22, 2023, compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,784.6 million as of Apr 22, 2023, up from $1,188.3 million on Dec 31, 2023. Year to date, net cash used by operating activities and FCF totaled $378.9 million and $468.9 million, respectively.
Dividend & Share Repurchase
AAP’s board slashed the cash dividend to 25 cents per share, which would be paid out on Jul 28, 2023, to all common shareholders of record as of Jul 14, 2023.
During the quarter under discussion, AAP repurchased around $12.6 million worth of shares.
Store Update
As of Apr 22, 2023, AAP operated 5,096 stores and 318 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,315 independently owned Carquest-branded stores across these locations, in addition to Mexico and various Caribbean islands.
Revised Guidance 2023
Advance Auto estimates 2023 net sales in the band of $11.2-$11.3 billion, down from the previous range of $11.4-$11.6 billion. Comparable store sales are now expected between negative 1% and 0%, down from the previous guided range of 1-3%. Adjusted operating income margin is envisioned in the range of 5-5.3%, down from previous guidance of 7.8-8.2%.
Advance Auto expects 2023 capex in the range of $250-$300 million, down from prior guided range of $300-$350 million. The company projects FCF in the band of $200-$300 million, down from the prior guidance of a minimum of $400 million. Diluted EPS is forecast between $6-$6.50 per share, down from the prior estimate of $10.2-$11.2 per share. It aims to open 40 to 60 new stores this year, which is lower than its prior estimate of 60-80 stores.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -44.94% due to these changes.
VGM Scores
Currently, Advance Auto Parts has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Advance Auto Parts has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Advance Auto Parts belongs to the Zacks Automotive - Retail and Wholesale - Parts industry. Another stock from the same industry, AutoZone (AZO - Free Report) , has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended May 2023.
AutoZone reported revenues of $4.09 billion in the last reported quarter, representing a year-over-year change of +5.8%. EPS of $34.12 for the same period compares with $29.03 a year ago.
For the current quarter, AutoZone is expected to post earnings of $44.63 per share, indicating a change of +10.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for AutoZone. Also, the stock has a VGM Score of A.
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Advance Auto Parts (AAP) Up 0.3% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have added about 0.3% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Advance Auto Parts due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Advance Auto Q1 Earnings & Revenues Miss Estimates
Advance Auto delivered adjusted earnings of 72 cents per share in first-quarter 2023, down 68.1% from the year-ago quarter's figure. The reported figure fell short of the Zacks Consensus Estimate of $2.60 per share. Advance Auto generated net revenues of $3,417.6 million lagged the Zacks Consensus Estimate of $3,427 million, but increased 1.3% year over year.
Comparable store sales dropped 0.4%. Operating income plunged 55.7% year over year to $90 million. SG&A expenses totaled $1,380 million for first-quarter 2023, up 5.9% year over year.
Financial Position
Advance Auto had cash and cash equivalents of $226.4 million as of Apr 22, 2023, compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,784.6 million as of Apr 22, 2023, up from $1,188.3 million on Dec 31, 2023. Year to date, net cash used by operating activities and FCF totaled $378.9 million and $468.9 million, respectively.
Dividend & Share Repurchase
AAP’s board slashed the cash dividend to 25 cents per share, which would be paid out on Jul 28, 2023, to all common shareholders of record as of Jul 14, 2023.
During the quarter under discussion, AAP repurchased around $12.6 million worth of shares.
Store Update
As of Apr 22, 2023, AAP operated 5,096 stores and 318 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,315 independently owned Carquest-branded stores across these locations, in addition to Mexico and various Caribbean islands.
Revised Guidance 2023
Advance Auto estimates 2023 net sales in the band of $11.2-$11.3 billion, down from the previous range of $11.4-$11.6 billion. Comparable store sales are now expected between negative 1% and 0%, down from the previous guided range of 1-3%. Adjusted operating income margin is envisioned in the range of 5-5.3%, down from previous guidance of 7.8-8.2%.
Advance Auto expects 2023 capex in the range of $250-$300 million, down from prior guided range of $300-$350 million. The company projects FCF in the band of $200-$300 million, down from the prior guidance of a minimum of $400 million. Diluted EPS is forecast between $6-$6.50 per share, down from the prior estimate of $10.2-$11.2 per share. It aims to open 40 to 60 new stores this year, which is lower than its prior estimate of 60-80 stores.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -44.94% due to these changes.
VGM Scores
Currently, Advance Auto Parts has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Advance Auto Parts has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Advance Auto Parts belongs to the Zacks Automotive - Retail and Wholesale - Parts industry. Another stock from the same industry, AutoZone (AZO - Free Report) , has gained 3.5% over the past month. More than a month has passed since the company reported results for the quarter ended May 2023.
AutoZone reported revenues of $4.09 billion in the last reported quarter, representing a year-over-year change of +5.8%. EPS of $34.12 for the same period compares with $29.03 a year ago.
For the current quarter, AutoZone is expected to post earnings of $44.63 per share, indicating a change of +10.2% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for AutoZone. Also, the stock has a VGM Score of A.