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Why Is Advance Auto Parts (AAP) Down 14.2% Since Last Earnings Report?
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It has been about a month since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Advance Auto Parts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Advance Auto Q2 Earnings Miss, Sales Top Estimates
Advance Auto delivered adjusted earnings of $1.43 per share for second-quarter 2023, down 62% from the year-ago quarter's figure. The reported figure also fell short of the Zacks Consensus Estimate of $1.72 per share. Advance Auto generated net revenues of $2,686 million, which topped the Zacks Consensus Estimate of $2,671 million on lower-than-expected comps decline. Comparable store sales dropped 0.6%. We projected a decline 0.7%. The top line increased 0.8% year over year.
Operating income plunged 33.3% year over year to $134.4 million. SG&A expenses totaled $1,013.7 million for second-quarter 2023, up 3% year over year.
Financial Position
Advance Auto had cash and cash equivalents of $277.1 million as of Jul 15, 2023, compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,785.1 million as of Jul 15, 2023, up from $1,188.3 million on Dec 31, 2022. From January through the second quarter of 2023, net cash used by operating activities and negative FCF totaled $164.6 million and $309.4 million, respectively.
AAP’s board declared a cash dividend of 25 cents per share, which would be paid out on Oct 27, 2023, to all common shareholders of record as of Oct 13, 2023.
Store Update
As of Jul 15, 2023, AAP operated 4,790 stores and 319 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,307 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 $11.25-$11.35 billion, up from the previous guided range of $11.2-$11.3 billion. Comparable store sales are projected within a range of negative 0.5% to positive 0.5%. Adjusted operating income margin is envisioned in the range of 4-4.3%, down from 5-5.3% guided earlier.
Advance Auto expects 2023 capex in the range of $200-$250 million, down from $250-$300 million. The company projects FCF in the band of $150-$250 million, down from the prior guidance of $200-$300 million. Earnings are forecast between $4.50-$5.10 per share, down from the prior estimate of $6-$6.50 per share. AAP aims to open 40 to 60 new stores this year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -26.51% due to these changes.
VGM Scores
At this time, Advance Auto Parts has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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.
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Why Is Advance Auto Parts (AAP) Down 14.2% Since Last Earnings Report?
It has been about a month since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have lost about 14.2% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Advance Auto Parts due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Advance Auto Q2 Earnings Miss, Sales Top Estimates
Advance Auto delivered adjusted earnings of $1.43 per share for second-quarter 2023, down 62% from the year-ago quarter's figure. The reported figure also fell short of the Zacks Consensus Estimate of $1.72 per share. Advance Auto generated net revenues of $2,686 million, which topped the Zacks Consensus Estimate of $2,671 million on lower-than-expected comps decline. Comparable store sales dropped 0.6%. We projected a decline 0.7%. The top line increased 0.8% year over year.
Operating income plunged 33.3% year over year to $134.4 million. SG&A expenses totaled $1,013.7 million for second-quarter 2023, up 3% year over year.
Financial Position
Advance Auto had cash and cash equivalents of $277.1 million as of Jul 15, 2023, compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,785.1 million as of Jul 15, 2023, up from $1,188.3 million on Dec 31, 2022. From January through the second quarter of 2023, net cash used by operating activities and negative FCF totaled $164.6 million and $309.4 million, respectively.
AAP’s board declared a cash dividend of 25 cents per share, which would be paid out on Oct 27, 2023, to all common shareholders of record as of Oct 13, 2023.
Store Update
As of Jul 15, 2023, AAP operated 4,790 stores and 319 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,307 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 $11.25-$11.35 billion, up from the previous guided range of $11.2-$11.3 billion. Comparable store sales are projected within a range of negative 0.5% to positive 0.5%. Adjusted operating income margin is envisioned in the range of 4-4.3%, down from 5-5.3% guided earlier.
Advance Auto expects 2023 capex in the range of $200-$250 million, down from $250-$300 million. The company projects FCF in the band of $150-$250 million, down from the prior guidance of $200-$300 million. Earnings are forecast between $4.50-$5.10 per share, down from the prior estimate of $6-$6.50 per share. AAP aims to open 40 to 60 new stores this year.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -26.51% due to these changes.
VGM Scores
At this time, Advance Auto Parts has an average Growth Score of C, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. 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.