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Advance Auto Parts Q3 Preview: What's in Store?

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The Zacks Retail and Wholesale sector has sailed through rough waters in 2022 facing high inflation, down more than 30% and lagging behind the S&P 500 by a fair margin.

A widely-recognized name in the realm, Advance Auto Parts (AAP - Free Report) , is on deck to unveil quarterly earnings on November 15th, after the market close.

Advance Auto Parts primarily sells replacement parts (excluding tires), accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy-duty trucks.

Currently, the automotive giant carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an A.

How does everything else stack up heading into the print? Let’s take a closer look.

Share Performance & Valuation

AAP shares have struggled to find their footing in 2022, down roughly 25% but outperforming the Zacks Retail and Wholesale sector modestly.

Zacks Investment Research
Image Source: Zacks Investment Research

Over the last three months, the story has remained the same; AAP shares have outperformed the Zacks Retail and Wholesale sector, down roughly 10%.

Zacks Investment Research
Image Source: Zacks Investment Research

Currently, shares trade at a 13.5X forward P/E ratio, nicely beneath its 18.8X five-year median and reflecting a solid 41% discount relative to its Zacks sector.

Further, Advance Auto Parts sports a Style Score of an A for Value.

Zacks Investment Research
Image Source: Zacks Investment Research

Quarterly Estimates

A singular analyst has lowered their earnings outlook for the quarter to be reported over the last several months, with the Zacks Consensus EPS Estimate of $3.31 suggesting a Y/Y uptick in earnings of more than 3%.

Zacks Investment Research
Image Source: Zacks Investment Research

The company’s top-line appears to be in solid standing as well; the Zacks Consensus Sales Estimate of $2.7 billion indicates an improvement of a marginal 1.2% Y/Y.

Quarterly Performance

AAP has primarily exceeded earnings estimates, surpassing the Zacks Consensus EPS Estimate in seven of its last ten quarters. In its latest print, the company reported earnings in-line with expectations.

As of late, sales results have left some to be desired, with the company falling short of revenue estimates in back-to-back quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.

Zacks Investment Research
Image Source: Zacks Investment Research

Putting Everything Together

AAP shares are in the red year-to-date but have outperformed the Zacks Retail and Wholesale sector across several timeframes.

Shares aren’t expensive, with the company’s forward earnings multiple well below the five-year median and Zacks sector average.

A singular analyst has lowered their earnings outlook over the last several months, with estimates indicating a Y/Y uptick in both revenue and earnings.

The company posted earnings in-line with expectations in its latest print and has fallen short of sales estimates in back-to-back quarters.

Heading into the release, Advance Auto Parts (AAP - Free Report) carries a Zacks Rank #3 (Hold) paired with an overall VGM Score of an A.


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