Advance Auto Parts (AAP - Free Report) is slated to release third-quarter 2022 results on Nov 15, after the market closes. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $3.31 and $2.65 billion, respectively.
For the third quarter, the consensus estimate for AAP’s earnings per share has moved down by 2 cents in the past 60 days. Its bottom-line estimates imply a rise of 3.12% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 1.19%. Over the trailing four quarters, AAP surpassed earnings estimates on three occasions and met the same once, with the average surprise being 5.42%. This is depicted in the graph below:
Q2 Highlights
In second-quarter 2022, AAP’s adjusted earnings per share of $3.74 were in line with the consensus metric. The bottom line increased 10% year over year from $3.40 a share. The company generated net revenues of $2,665.4 million, falling short of the Zacks Consensus Estimate of $2,748 million but edging up 0.6% from the year-ago reported figure. Comparable same-store declined 0.60%.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Advance Auto Parts for the quarter to be reported, as it does not have the right combination of the two key ingredients. A combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: AAP has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate equals the Zacks Consensus Estimate.
Zacks Rank: It currently carries a Zacks Rank of 3.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Factors at Play
AAP’s e-commerce initiatives have garnered steam. A ramp-up of its online portal, MyAdvance and enhancements to its DIY omni-channel platform have increased traffic and resulted in higher conversion rates. These are likely to have aided the firm’s revenues in the third quarter.
The demand for aftermarket parts is on the rise, spurred by higher demand for environmentally sustainable vehicles. As the electric vehicle fleet grows, owners are more driven to add modernized features to existing cars, which is an important contributor to Advance Auto Parts’ aftermarket products. Moreover, the easing of Covid-related restrictions has seen a surge in vehicle miles traveled. This calls for a rise in the demand for repair parts and services. These, along with robust e-commerce activities, are likely to have acted as tailwinds for the automotive retailer in the third quarter.
AAP is also focused on opening new stores. Its results for the to-be-reported quarter are likely to have reflected the benefits of its expanded foothold. The Zacks Consensus Estimate for the total number of retail stores at the third quarter-end is pegged at 5,072, indicating a rise from the year-ago quarter’s store count of 4,727.
However, on the flip side, intensive expansion has led Advance Auto Parts to bear the brunt of high selling, general and administrative (SG&A) costs, which are limiting the firm’s margins. In the second quarter, adjusted SG&A expenses increased to $984 million from $944.3 million in the year-ago period. The trend is expected to have continued amid huge costs for store openings, partnerships and investments to strengthen the supply chain, straining the firm’s third-quarter profits.
Escalating costs of raw materials amid a shortage of components might have clipped margins. Inefficiencies in the distribution infrastructure, difficult labor environment and global logistics challenges are likely to have weighed on its third-quarter performance.
Discouragingly, the firm has brought down its 2022 guidance. It estimates 2022 net sales in the band of $11-$11.2 billion, down from the previously guided range of $11.2-$11.5 billion. Comparable store sales are now envisioned to decline up to 1% against the prior forecast of 1-3% growth. Adjusted operating income margin is expected in the range of 9.8-10%, down from the prior estimate of 10-10.2%. Adjusted EPS is now forecast between $12.75 and $13.25, down from the previously guided range of $13.30-$13.85. This dims the outlook for AAP’s upcoming results.
Other Earnings Releases From Auto Space
While an earnings beat is uncertain for Advance Auto Parts, here are a few stocks, which have delivered an earnings beat in the third quarter:
Standard Motor Products (SMP - Free Report) released third-quarter 2022 results on Oct 28. It reported adjusted earnings of $1.05 per share, beating the Zacks Consensus Estimate of 95 cents but the bottom line declined 20% from the prior-year quarter’s $1.32 a share. Total revenues rose 3% year over year to $381.4 million, almost on par with the Zacks Consensus Estimate of $381 million. SMP surpassed earnings estimates in three of the four trailing quarters and missed once, with the average surprise being 9.33%.
Allison Transmission Holdings (ALSN - Free Report) released third-quarter 2022 results on Oct 26. It posted third-quarter earnings of $1.45 a share, which topped the Zacks Consensus Estimate of $1.31. The bottom line increased 63% on a year-over-year basis from 89 cents a share. Quarterly revenues of $710 million grew 25% from the year-ago period and crossed the consensus mark of $691 million. ALSN surpassed earnings estimates in three of the trailing four quarters and missed once, with the average surprise being a negative 10.27%.
O’Reilly Automotive (ORLY - Free Report) released third-quarter 2022 results on Oct 03. Its adjusted earnings per share of $9.17 beat the Zacks Consensus Estimate of $8.46. The bottom line increased 13.6% from $8.07 in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $3,799.6 million, crossing the consensus mark of $3,713 million. The top line was 9% higher than the prior-year figure of $3,479.5 million. ORLY surpassed earnings estimates in two of the four trailing quarters and missed twice, with the average surprise being 7.5%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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November 14, 2022 at 08:34PM
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What's in the Offing for Advance Auto Parts (AAP) in Q3? - Zacks Investment Research
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