It has been about a month since the last earnings report for Advance Auto Parts (AAP). Shares have added about 26% 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 catalysts.

Advance Auto Incurs Q4 Loss

Advance Auto incurred incurred an adjusted loss of 59 cents per share for fourth-quarter 2023 against an adjusted earnings of $2.88 in the year-ago quarter. The reported figure was also in contrast to the Zacks Consensus Estimate of earnings of 24 cents per share.

Advance Auto generated net revenues of $2.46 billion, which missed the Zacks Consensus Estimate of $2.47 billion on lower-than-expected comparable store sales. Comparable store sales decreased 1.4% year over year. We projected a decline of 0.5% for the same. The top line dipped 0.4% year over year.

Advance Auto reported an operating loss of $48.6 million against the operating income of $119.3 million recorded in the corresponding quarter of 2022. SG&A expenses totaled $999.4 million for fourth-quarter 2023, up 4.4% year over year.

AAP had cash and cash equivalents of $503.5 million as of Dec 30, 2023 compared with $270.8 million as of Dec 31, 2022. Total long-term debt was $1.79 billion as of Dec 30, 2023, up from $1.19 billion as of Dec 31, 2022. From January through the fourth quarter of 2023, net cash provided by operating activities and free cash flow totaled $286.1 million and $43.7 million, respectively.

AAP’s board declared a cash dividend of 25 cents per share, which would be paid out on Apr 26, 2024, to all common shareholders of record as of Apr 12, 2024.

As of Dec 30, 2023, AAP operated 4,786 stores and 321 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,245 independently owned Carquest-branded stores across these locations, in addition to Mexico and various Caribbean islands.



Advance Auto expects 2024 net sales in the band of $11.30-$11.40 billion, up from $11.29 billion reported in 2023. Comparable store sales are projected in the range of 0% to 1%. The operating income margin is envisioned in the range of 3.2-3.5%.

AAP expects 2024 capex in the range of $200-$250 million. The company projects a minimum free cash flow of $250 million. Earnings per share (EPS) are expected between $3.75 and $4.25, up from the earnings of 50 cents reported in 2023.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 5.26% due to these changes.

VGM Scores

Currently, Advance Auto Parts has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Advance Auto Parts has a Zacks Rank #3 (Hold). We expect an in-line 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), has gained 4.8% over the past month. More than a month has passed since the company reported results for the quarter ended February 2024.

AutoZone reported revenues of $3.86 billion in the last reported quarter, representing a year-over-year change of +4.6%. EPS of $28.89 for the same period compares with $24.64 a year ago.

AutoZone is expected to post earnings of $35.50 per share for the current quarter, representing a year-over-year change of +4%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.

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 C.

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Advance Auto Parts, Inc. (AAP):Free Stock Analysis Report

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