Advance Auto Parts Earnings Preview

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Advance Auto Parts (NYS: AAP) beat estimates by $0.22 last quarter and investors are hoping it can beat them again. The company will unveil its latest earnings on Thursday, Feb. 16. Advance Auto Parts is a specialty retailer of automotive aftermarket parts, accessories, batteries, and maintenance items, mainly operating within the United States.

What analysts say:

  • Buy, sell, or hold?: Analysts think investors should stand pat on Advance Auto Parts, with 11 of 18 analysts rating it hold. Analysts like Advance Auto Parts better than competitor Pep Boys overall. One out of five analysts rate Pep Boys a buy compared to seven of 18 for Advance Auto Parts. Analysts still rate the stock a hold, but they are a bit more wary about it compared to three months ago.
  • Revenue Forecasts: On average, analysts predict $1.32 billion in revenue this quarter. That would represent a rise of 3.9% from the year-ago quarter.
  • Wall Street Earnings Expectations: The average analyst estimate is earnings of $0.74 per share. Estimates range from $0.69 to $0.80.

What our community says:
CAPS All-Stars are solidly behind the stock, with 94.2% granting it an "outperform" rating. The community at large is in line with the All-Stars, with 90.9% giving it a rating of "outperform." Fools are keen on Advance Auto Parts, though the message boards have been quiet lately with only 82 posts in the past 30 days. Despite the majority sentiment in favor of Advance Auto Parts, the stock has a middling CAPS rating of three out of five stars.

Management:
Advance Auto Parts' profit has risen year-over-year by an average of 18.1% over the past five quarters. Revenue has now gone up for three straight quarters.

Now, a look at how efficient management has been at running the business. Traditionally, margins represent the efficiency with which companies capture portions of sales dollars. Advance Auto Parts' net margins are up for the last two quarters year-over-year. Net margins reflect what percentage of each dollar earned by the company becomes profit. Here are Advance Auto Parts' reported margins for the last four quarters:

Quarter

Q3

Q2

Q1

Q4

Gross Margin

49.5%

49.7%

50.5%

49.4%

Operating Margin

12.1%

12.8%

9.8%

6.6%

Net Margin

7.2%

7.6%

5.8%

3.8%

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