It has been about a month since the last earnings report for Advance Auto Parts (AAP - Free Report) . Shares have added about 16.4% 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 its most recent earnings report in order to get a better handle on the important drivers.
Advance AutoParts’ Q2 Earnings Miss Estimates, Up Y/Y
Advance Auto Parts, Inc. reported adjusted earnings of $2 per share in second-quarter 2019 (ended Jul 13, 2019), up 1.5% from the prior-year quarter’s level. The figure missed the Zacks Consensus Estimate of $2.22. Adjusted operating income declined 4.3% year over year to $196.4 million.
Advance Auto Parts generated net revenues of $2.33 billion, which missed the Zacks Consensus Estimate of $2.35 billion. Revenues were 0.2% higher than the year-ago quarter’s tally. During the quarter under review, comparable store sales were flat year over year.
Operating income inched up 1.9% year over year to $170.8 million in the reported quarter. Adjusted operating income margin declined 40 basis points year over year to 8.4% of net sales.
Adjusted selling, general and administrative (SG&A) expenses totaled $813 million compared with $811 million in the year-ago quarter.
Advance Auto Parts had cash and cash equivalents of $747.7 million as of Jul 13 compared with $896.5 million as of Dec 29, 2018. Total long-term debt was $746.9 million as of Jul 13 compared with $1.05 billion as of Dec 29, 2018.
In second-quarter 2019, operating cash flow was $492.2 million, up from $440 million in the prior-year quarter.
Dividend & Share Repurchase
On Aug 7, 2019, Advance Auto Parts’ board approved cash dividend of 6 cents per share to be paid on Oct 4, 2019 to all common shareholders of record as of Sep 20, 2019.
On Aug 7, 2019, the board of directors authorized a $400-million share repurchase program, replacing the remaining portion of the company's $600-million share repurchase program that was authorized in August 2018.
As of Jul 13, the company operated 4,912 stores and 150 Worldpac branches as well as served approximately 1,250 independently-owned Carquest branched stores.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
At this time, Advance Auto Parts has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
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.