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Why Is Advance Auto Parts (AAP) Up 19.8% Since Last Earnings Report?
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A month has gone by since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have added about 19.8% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Advance Auto Posts Q3 Loss
Advance Auto incurred an adjusted loss of 82 cents per share for third-quarter 2023 against adjusted earnings of $1.92 in the year-ago quarter. The reported figure was also in contrast to the Zacks Consensus Estimate of earnings of $1.42 per share. Advance Auto generated net revenues of $2,719 million, which topped the Zacks Consensus Estimate of $2,679 million on higher-than-expected comparable store sales. Comparable store sales increased 1.2%. We projected an increase of 0.2%. The top line increased 2.9% year over year.
Advance Auto reported an operating loss of $43.7 million, down from operating income of $171 million recorded in the corresponding quarter of 2022. SG&A expenses totaled $1,030.4 million for third-quarter 2023, up 2.2% year over year.
Advance Auto had cash and cash equivalents of $317.5 million as of Oct 7, 2023 compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,785.7 million as of Oct 7, 2023, up from $1,188.3 million on Dec 31, 2022. From January through the third quarter of 2023, net cash provided by operating activities and negative free cash flow totaled $30.4 million and $156.8 million, respectively.
AAP’s board declared a cash dividend of 25 cents per share, which would be paid out on Jan 26, 2024, to all common shareholders of record as of Jan 12, 2024.
As of Oct 7, 2023, AAP operated 4,785 stores and 320 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.
Advance Auto now estimates 2023 net sales in the band of $11.25-$11.30 billion compared with the previous guided range of $11.25-$11.35 billion. Comparable store sales are projected within a range of negative 0.5% to 0%. The operating income margin is envisioned in the range of 1.8-2%, down from 4-4.3%, guided earlier.
AAP expects 2023 capex in the range of $200-$250 million. The company projects FCF in the band of $50-$100 million, down from the prior guidance of $150-$250 million. Earnings are forecast between $1.40 per share and $1.80 per share, down from the previous estimate of $4.50-$5.10 per share. AAP now aims to open 55 to 65 new stores this year, up from the prior guidance of 40 to 60 stores.
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 -73.73% due to these changes.
VGM Scores
At this time, 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 second quintile 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 #4 (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) Up 19.8% Since Last Earnings Report?
A month has gone by since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have added about 19.8% in that time frame, outperforming 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 the most recent earnings report in order to get a better handle on the important drivers.
Advance Auto Posts Q3 Loss
Advance Auto incurred an adjusted loss of 82 cents per share for third-quarter 2023 against adjusted earnings of $1.92 in the year-ago quarter. The reported figure was also in contrast to the Zacks Consensus Estimate of earnings of $1.42 per share. Advance Auto generated net revenues of $2,719 million, which topped the Zacks Consensus Estimate of $2,679 million on higher-than-expected comparable store sales. Comparable store sales increased 1.2%. We projected an increase of 0.2%. The top line increased 2.9% year over year.
Advance Auto reported an operating loss of $43.7 million, down from operating income of $171 million recorded in the corresponding quarter of 2022. SG&A expenses totaled $1,030.4 million for third-quarter 2023, up 2.2% year over year.
Advance Auto had cash and cash equivalents of $317.5 million as of Oct 7, 2023 compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,785.7 million as of Oct 7, 2023, up from $1,188.3 million on Dec 31, 2022. From January through the third quarter of 2023, net cash provided by operating activities and negative free cash flow totaled $30.4 million and $156.8 million, respectively.
AAP’s board declared a cash dividend of 25 cents per share, which would be paid out on Jan 26, 2024, to all common shareholders of record as of Jan 12, 2024.
As of Oct 7, 2023, AAP operated 4,785 stores and 320 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.
Advance Auto now estimates 2023 net sales in the band of $11.25-$11.30 billion compared with the previous guided range of $11.25-$11.35 billion. Comparable store sales are projected within a range of negative 0.5% to 0%. The operating income margin is envisioned in the range of 1.8-2%, down from 4-4.3%, guided earlier.
AAP expects 2023 capex in the range of $200-$250 million. The company projects FCF in the band of $50-$100 million, down from the prior guidance of $150-$250 million. Earnings are forecast between $1.40 per share and $1.80 per share, down from the previous estimate of $4.50-$5.10 per share. AAP now aims to open 55 to 65 new stores this year, up from the prior guidance of 40 to 60 stores.
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 -73.73% due to these changes.
VGM Scores
At this time, 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 second quintile 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 #4 (Sell). We expect a below average return from the stock in the next few months.