Advance Auto (AAP) Q3 Earnings Miss Estimates, Sales Beat
Advance Auto Parts, Inc. AAP incurred an adjusted loss of 82 cents per share for third-quarter 2023 against adjusted earnings of $1.92 in the year-ago quarter. The reported figure was also in contrast to the Zacks Consensus Estimate of earnings of $1.42 per share. Advance Auto generated net revenues of $2,719 million, which topped the Zacks Consensus Estimate of $2,679 million on higher-than-expected comparable store sales. Comparable store sales increased 1.2%. We projected an increase of 0.2%. The top line increased 2.9% year over year.
Advance Auto reported an operating loss of $43.7 million, down from operating income of $171 million recorded in the corresponding quarter of 2022. SG&A expenses totaled $1,030.4 million for third-quarter 2023, up 2.2% year over year.
Advance Auto had cash and cash equivalents of $317.5 million as of Oct 7, 2023 compared with $269.3 million on Dec 31, 2023. Total long-term debt was $1,785.7 million as of Oct 7, 2023, up from $1,188.3 million on Dec 31, 2022. From January through the third quarter of 2023, net cash provided by operating activities and negative free cash flow totaled $30.4 million and $156.8 million, respectively.
AAP’s board declared a cash dividend of 25 cents per share, which would be paid out on Jan 26, 2024, to all common shareholders of record as of Jan 12, 2024.
As of Oct 7, 2023, AAP operated 4,785 stores and 320 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. It also served 1,307 independently owned Carquest-branded stores across these locations, in addition to Mexico and various Caribbean islands.
Advance Auto now estimates 2023 net sales in the band of $11.25-$11.30 billion compared with the previous guided range of $11.25-$11.35 billion. Comparable store sales are projected within a range of negative 0.5% to 0%. The operating income margin is envisioned in the range of 1.8-2%, down from 4-4.3%, guided earlier.
AAP expects 2023 capex in the range of $200-$250 million. The company projects FCF in the band of $50-$100 million, down from the prior guidance of $150-$250 million. Earnings are forecast between $1.40 per share and $1.80 per share, down from the previous estimate of $4.50-$5.10 per share. AAP now aims to open 55 to 65 new stores this year, up from the prior guidance of 40 to 60 stores.
Advance Auto Parts, Inc. Price, Consensus and EPS Surprise
Advance Auto Parts, Inc. price-consensus-eps-surprise-chart | Advance Auto Parts, Inc. Quote
Zacks Rank & Key Picks
AAP currently carries a Zacks Rank #4 (Sell).
Some top-ranked players in the auto space are Toyota Motor Corporation TM and Volvo VLVLY, each sporting Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for TM’s 2023 sales and earnings implies year-over-year growth of 10.6% and 29.7%, respectively. The EPS estimates for 2023 and 2024 have increased by 46 cents and 26 cents, respectively, in the past 30 days.
The Zacks Consensus Estimate for VLVLY’s 2023 sales and earnings indicates year-over-year growth of 4.2% and 65.6%, respectively. The EPS estimate for 2023 has increased by 32 cents in the past seven days. The EPS estimate for 2024 has increased by 11 cents in the past 30 days.
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