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What's in the Cards for CarParts.com (PRTS) in Q2 Earnings?

·5 min read

CarParts.com PRTS is slated to release fiscal second-quarter 2022 (ended Jul 2) results on Aug 2. The Zacks Consensus Estimate for the quarter’s revenues and earnings is pegged at $175.38 million and 3 cents a share, respectively.

Let’s delve into the factors that might influence the e-commerce auto parts provider’s second-quarter results. But it’s worth taking a look at PRTS’ previous-quarter performance first.

Q1 Highlights & Surprise History

In the last reported quarter, CarParts.com put up an impressive show, posting record-breaking sales and adjusted EBITDA numbers. It recorded earnings of 4 cents a share as against the Zacks Consensus Estimate of a loss of 5 cents. Adjusted EBITDA increased to $9.4 million from $3.6 million generated in the year-ago quarter. Revenues of $166 million rose 15% year over year and also beat the consensus mark of $160 million. It also marked the company’s ninth consecutive quarter of double-digit year-over-year revenue growth.

Over the trailing four quarters, CarParts.com surpassed earnings estimates thrice and missed the same once, with the average surprise being 78.34%. This is depicted in the graph below:

CarParts.com, Inc. Price and EPS Surprise

CarParts.com, Inc. Price and EPS Surprise
CarParts.com, Inc. Price and EPS Surprise

CarParts.com, Inc. price-eps-surprise | CarParts.com, Inc. Quote

Trend in Estimate Revision

The Zacks Consensus Estimate for the fiscal second-quarter bottom line has remained the same over the past 60 days. The estimated figure indicates a 25% decline jump year over year. The Zacks Consensus Estimate for revenues, meanwhile, suggests an 11.3% increase from the year-ago period.

Things to Note

Robust demand for vehicles is likely to have buoyed the sales of the automotive parts and accessories provider. In the face of supply-chain disruptions and commodity inflation, CarParts.com has been successfully passing the rising costs of raw materials to customers through smart pricing actions. Moreover, the firm’s new CEO David Meniane’s sharp focus on operational discipline is likely to have borne fruits. These factors are expected to positively impact PRTS’ fiscal second-quarter results.

Expanded capacity at its Grand Prairie distribution center, which became fully operational in the first quarter of 2022, is anticipated to have played a significant role in bolstering the company’s inventory footprint.The expansion has not just boosted the inventory of brand partners but also created more space for CarParts.com's premium brands like TrueDrive, DriveWire, DriveMotive, JC Whitney and SureStop brake product line. During the quarter-to-be-reported, CarParts.com is likely to have opened a new distribution center in Jacksonville, FL (as notified by the company on its last earnings call), which would further raise prospects.

Overall, strong demand for its products, ramp up of the Grand Prairie distribution center, the addition of new warehouses to meet demand, and the company's ability to stay on the right track despite an uncertain macro environment bode well for the fiscal second-quarter results. On a slight negative note, CarParts.com has been bearing the brunt of rising operational costs due to investments in the business since the past few quarters and the trend is likely to have continued, which could have marginally clipped margins.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for CarParts.com for the quarter that is to be reported, as it lacks the right combination of the two key ingredients. The combination of a positive Earnings ESPand 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: CarParts.com has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is in line with the Zacks Consensus Estimate.

Zacks Rank: It currently carries a Zacks Rank of 2.

Stocks With the Favorable Combination

While an earnings beat appears uncertain for PRTS, here are a couple of players from the auto space, which, according to our model, have the right combination of elements to post an earnings beat for the quarter to be reported:

Allison Transmission ALSN has an Earnings ESP of +0.28% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Aug 3.

The Zacks Consensus Estimate for Allison’s to-be-reported quarter’s earnings and revenues is pegged at $1.35 per share and $698 million, respectively. Encouragingly, ALSN surpassed earnings estimates in the last four quarters, with the average being 11.7%.

Rivian Automotive RIVN has an Earnings ESP of +9.58% and a Zacks Rank #3. The stock is set to report second-quarter 2022 earnings on Aug 11.

The Zacks Consensus Estimate for Rivian’s to-be-reported quarter’s bottom and the top line is pegged at a loss of $1.67 per share and $337.7 million, respectively. Over the trailing three quarters, Rivian has outpaced earnings estimates twice and missed once, the average negative surprise being 4.52%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

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