What's in Store for Advance Auto (AAP) This Earnings Season?
Advance Auto Parts AAP is slated to release second-quarter 2023 results on Aug 23, before market open. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share and revenues is pegged at $2.67 and $1.59 billion, respectively.
For the second quarter, the consensus estimate for AAP’s earnings per share has moved down by 20 cents in the past 60 days. The bottom-line estimate implies a deterioration of 57.5% from the year-ago reported number. The Zacks Consensus Estimate for its quarterly revenues suggests a year-over-year increase of 0.26%.
Over the trailing four quarters, AAP surpassed earnings estimates once, missed on two occasions and met the same on the other, the average negative surprise being 16.8%. This is depicted in the graph below.
Advance Auto Parts, Inc. Price and EPS Surprise
Advance Auto Parts, Inc. price-eps-surprise | Advance Auto Parts, Inc. Quote
Q1 Highlights
Advance Auto delivered adjusted earnings of 72 cents per share in first-quarter 2023, down 68.1% from the year-ago quarter's figure. The reported figure fell short of the Zacks Consensus Estimate of $2.60 per share. Advance Auto generated net revenues of $3,417.6 million, lagging the Zacks Consensus Estimate of $3,427 million but increasing 1.3% year over year. Comparable store sales dropped 0.4%.
Factors to Shape Q2 Results
Intensive expansion efforts have forced Advance Auto Parts to bear the brunt of high selling, general and administrative (SG&A) costs, which are limiting the firm’s margins. During the last reported quarter, SG&A expenses were 40.4% of net sales, up from 38.6% of net sales reported in the same quarter of 2023. The trend is expected to have continued in the second quarter of 2023 as well, weighing on the margins. We anticipate adjusted SG&A costs to inch up 5% year over year.
Moreover, rising investments to develop technology platforms and digital initiatives are set to dent the firm’s margins in the to-be-reported quarter. The company continues to deploy capital to pursue new growth opportunities through investments, partnerships and acquisitions. Amid rising expenses, our projections call for adjusted operating income to decline 48% in the second quarter of 2023.
The trimmed 2023 guidance sparks pessimism for the upcoming results. Advance Auto estimates 2023 net sales in the band of $11.2-$11.3 billion, down from the previous range of $11.4-$11.6 billion. Comparable store sales are now expected between negative 1% and 0%, down from the previous guided range of 1-3%.
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.
Earnings ESP: AAP has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1 Rank stocks here.
Key Releases From the Same Space
O’Reilly Automotive, Inc. ORLY reported second-quarter 2023 adjusted earnings per share of $10.22, beating the Zacks Consensus Estimate of $10.05. The bottom line increased from $8.78 in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $4,069 million, crossing the Zacks Consensus Estimate of $3,990 million. The top line increased 11% year over year.The total store count was 6,071 as of Jun 30, 2023.
ORLY had cash and cash equivalents of $57.9 million at the end of the reported quarter, down from $108.6 million recorded as of 2022-end. Its long-term debt was $4,873.7 million, higher than $4,371.6 million as of Dec 31, 2022.
AutoNation, Inc. AN reported second-quarter 2023 adjusted earnings of $6.29 per share, which decreased 2.9% year over year but topped the Zacks Consensus Estimate of $5.83. The earnings beat can be primarily attributed to higher-than-expected new vehicle revenues and profits. In the reported quarter, revenues amounted to $6,890.1 million, surpassing the Zacks Consensus Estimate of $6,645 million. The company had recorded revenues of $6,869.2 million in the second quarter of 2022.
AutoNation’s cash and cash equivalents were $63.7 million as of Jun 30, 2023, declining from $72.6 million recorded as of Dec 31, 2022. The company’s liquidity was $1.4 billion, including $64 million in cash and nearly $1.3 billion available under its revolving credit facility.
Lithia Motors LAD reported adjusted earnings of $10.91 per share for second-quarter 2023, which declined from the prior-year quarter’s $12.18. The bottom line, nevertheless, surpassed the Zacks Consensus Estimate of $9.19 per share. Total revenues jumped 12% year over year to $8,111.5 million. The top line outpaced the Zacks Consensus Estimate of $7,697 million.
Lithia had cash/cash equivalents/restricted cash of $199.7 million as of Jun 30, 2023, down from $246.7 million as of Dec 31, 2022. Long-term debt was $5,414 million as of Jun 30, 2023, up from $5,088.3 million as of Dec 31, 2022.
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O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
AutoNation, Inc. (AN) : Free Stock Analysis Report
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
Lithia Motors, Inc. (LAD) : Free Stock Analysis Report
