J.P. Morgan Remains Underweight On AAP

J.P. Morgan is maintaining its Underweight rating on Advance Auto Parts AAP following the company's 3Q numbers. Says J.P. Morgan, in its report, “AAP reported operating EPS of $1.46 vs. $1.16 LY, above our estimate of $1.41 and consensus of $1.38. Total sales increased 4.4%, with same-store sales of 2.5% compared to our estimate of 3.7%. Gross margin was down 70 bps in the quarter, the first decline since prior to 2008 and vs. up 70 bps in 1Q (we were forecasting up 10 bps). Total op expenses more than offset the comp and gross margin miss. AAP delivered SG&A per store of (2.5%), with total expenses of $547MM well below our $574MM estimate. Share repos also contributed $0.06 to EPS.” AAP closed at $50.10 yesterday.