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Advance Auto Parts, Inc. (AAP - Free Report) is struggling in a challenging retail environment. This Zacks Rank #5 (Strong Sell) recently missed on earnings for the 6th quarter in a row.
Advance Auto Parks is an automotive aftermarket parts providers that serves both professional installers and do-it-yourself (DIY) customers.
As of July 13, 2024, Advance Auto Parks operated 4,776 stores and 321 Worldpac branches mostly in the United States but with additional locations in Canada, Puerto Rico, and the US Virgin Islands. It also sells online at its website of AdvanceAutoParts.com.
Another Miss in the Second Quarter of 2024
On Aug 22, 2024, Advance Auto Parts reported its second quarter 2024 results and missed again on earnings. It reported $0.75 versus the Zacks Consensus of $0.97, or a miss of $0.22.
Here’s what its earnings surprise track record has looked like over the last 5 years.
Image Source: Zacks Investment Research
Sales were flat compared to the year ago quarter, at $2.7 billion.
Comparable store sales, a key metric for retailers, was up, but just 0.4%. But the company saw this as a win due to the “challenging demand environment” during the quarter.
Selling Worldpac for $1.5 Billion
On Aug 22, 2024, Advance Auto Parts also announced it was selling its wholesale distribution business, Worldpac, to Carlyle for $1.5 billion in cash.
This will allow Advance Auto Parts to focus on the big box retail component of the business and will free up some ready cash.
The transaction is expected to close by the end of the year.
Analysts are Bearish as They Cut Earnings Estimates
Analysts are bearish on Advance Auto Parts. 3 estimates have been cut for both 2024 and 2025 over the last month.
The 2024 Zacks Consensus has fallen to $3.61 from $3.94 over the last 90 days. But that is still earnings growth of 622% as the company only made $0.50 last year.
3 estimates have also been cut for 2025 over the last month as well. That has pushed the Zacks Consensus down to $4.25 from $4.46 over the last 90 days. That’s further earnings growth of 17.9%.
However, for 2024, the company’s comparable store sales guidance remained weak at a range of a decline of 1.0% on the low end and flat, or 0.0%, on the high end.
Here’s what it looks like on the chart.
Image Source: Zacks Investment Research
Shares of Advance Auto Parts Near New 5-Year Lows
Once a pandemic winner, shares of Advance Auto Parts have now sunk to new 5-year lows. It is going the opposite direction from the S&P 500 over that period.
Image Source: Zacks Investment Research
Is it cheap?
Advance Auto Parts trades with a forward P/E of 13.6.
It is also paying a dividend, currently yielding 2%.
But with the analysts so pessimistic, investors may want to wait on the sidelines for a turnaround in comp sales. That's when you'll know the business is turning ti around.
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Bear of the Day: Advance Auto Parts (AAP)
Advance Auto Parts, Inc. (AAP - Free Report) is struggling in a challenging retail environment. This Zacks Rank #5 (Strong Sell) recently missed on earnings for the 6th quarter in a row.
Advance Auto Parks is an automotive aftermarket parts providers that serves both professional installers and do-it-yourself (DIY) customers.
As of July 13, 2024, Advance Auto Parks operated 4,776 stores and 321 Worldpac branches mostly in the United States but with additional locations in Canada, Puerto Rico, and the US Virgin Islands. It also sells online at its website of AdvanceAutoParts.com.
Another Miss in the Second Quarter of 2024
On Aug 22, 2024, Advance Auto Parts reported its second quarter 2024 results and missed again on earnings. It reported $0.75 versus the Zacks Consensus of $0.97, or a miss of $0.22.
Here’s what its earnings surprise track record has looked like over the last 5 years.
Image Source: Zacks Investment Research
Sales were flat compared to the year ago quarter, at $2.7 billion.
Comparable store sales, a key metric for retailers, was up, but just 0.4%. But the company saw this as a win due to the “challenging demand environment” during the quarter.
Selling Worldpac for $1.5 Billion
On Aug 22, 2024, Advance Auto Parts also announced it was selling its wholesale distribution business, Worldpac, to Carlyle for $1.5 billion in cash.
This will allow Advance Auto Parts to focus on the big box retail component of the business and will free up some ready cash.
The transaction is expected to close by the end of the year.
Analysts are Bearish as They Cut Earnings Estimates
Analysts are bearish on Advance Auto Parts. 3 estimates have been cut for both 2024 and 2025 over the last month.
The 2024 Zacks Consensus has fallen to $3.61 from $3.94 over the last 90 days. But that is still earnings growth of 622% as the company only made $0.50 last year.
3 estimates have also been cut for 2025 over the last month as well. That has pushed the Zacks Consensus down to $4.25 from $4.46 over the last 90 days. That’s further earnings growth of 17.9%.
However, for 2024, the company’s comparable store sales guidance remained weak at a range of a decline of 1.0% on the low end and flat, or 0.0%, on the high end.
Here’s what it looks like on the chart.
Image Source: Zacks Investment Research
Shares of Advance Auto Parts Near New 5-Year Lows
Once a pandemic winner, shares of Advance Auto Parts have now sunk to new 5-year lows. It is going the opposite direction from the S&P 500 over that period.
Image Source: Zacks Investment Research
Is it cheap?
Advance Auto Parts trades with a forward P/E of 13.6.
It is also paying a dividend, currently yielding 2%.
But with the analysts so pessimistic, investors may want to wait on the sidelines for a turnaround in comp sales. That's when you'll know the business is turning ti around.