Advance Auto to Report Q1 Earnings: What's in the Cards?

Advance Auto Parts AAP is slated to release first-quarter 2024 results on May 29, before market open. The Zacks Consensus Estimate for earnings per share and revenues is pegged at 69 cents and $3.43 billion, respectively.
The consensus estimate for AAP's EPS has moved down 23 cents in the past 60 days. The bottom-line estimate implies a deterioration of 4.17% from the year-ago reported number. The Zacks Consensus Estimate for revenues indicates a year-over-year rise of 0.46%.
AAP's earnings missed estimates in each of the trailing four quarters, delivering an average negative surprise of 148.19%. 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

Q4 Highlights

Advance Auto incurred an adjusted loss of 59 cents per share in fourth-quarter 2023 against adjusted earnings of $2.88 per share in the year-ago quarter. The reported figure missed the Zacks Consensus Estimate of earnings of 24 cents per share. The company generated net revenues of $2.46 billion, which missed the consensus estimate of $2.47 billion and fell 0.4% year over year. Comparable store sales decreased 1.4%.

Factors to Note

Advance Auto's current supply-chain network suffers from inefficiencies stemming from its dual distribution center set up for the legacy Carquest and Advance businesses. This disjointed structure leads to increased operational costs and inventory management challenges, which negatively impact the company's cost structure and inventory availability. Elevated supply-chain costs negatively impacted 2023 gross margins by 50 basis points.
The company also faces pressure due to escalating SG&A expenses, which reached $999 million in the fourth quarter of 2023 compared with $960 million in fourth-quarter 2022. SG&A expenses as a percentage of sales deleveraged 176 basis points to 40.6% owing to escalating occupancy costs, heightened labor-related expenses and new store expenditures. Full-year 2023 SG&A expenses increased 3.5%, with SG&A as a percentage of net sales rising by 85 basis points to 39.1%.
Inefficiencies in the supply-chain network and rising SG&A expenses are likely to have hurt AAP's performance in the quarter.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for Advance Auto 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.
Zacks Rank: The company currently carries a Zacks Rank #5 (Strong Sell).

Key Releases From the Same Space

O'Reilly Automotive, Inc. ORLY reported first-quarter adjusted EPS of $9.20, which surpassed the Zacks Consensus Estimate of $9.18. The figure increased from earnings of $8.28 per share reported in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $3.98 billion, which surpassed the consensus estimate of $3.96 billion. The top line also increased 3.4% year over year. Comps grew 3.4%. The company opened 37 new stores in the United States and Mexico and started operating 23 stores in Canada. The total store count was 6,217 as of Mar 31, 2024.
ORLY had cash and cash equivalents of $89.3 million at the end of the quarter, down from $279.1 million recorded as of 2023-end. Its long-term debt was $5.29 billion, lower than $5.57 billion as of Dec 31, 2023.
AutoNation, Inc. AN reported first-quarter 2024 adjusted earnings of $4.49 per share, which decreased 25.7% year over year but topped the Zacks Consensus Estimate of $4.45. The earnings beat can be primarily attributed to higher-than-expected gross profit from the sale of new vehicles and wholesale used vehicles.  Revenues amounted to $6.48 billion, which missed the consensus estimate of $6.49 billion. The company had recorded revenues of $6.39 billion in the first quarter of 2023.
AutoNation's cash and cash equivalents were $60.3 million as of Mar 31, 2024. The company's liquidity was $1.7 billion, including $60 million in cash and nearly $1.6 billion available under its revolving credit facility.
Lithia Motors LAD reported adjusted earnings of $6.11 per share for the first quarter, which declined from the prior-year quarter's $8.44. The bottom line missed the Zacks Consensus Estimate of earnings of $7.85 per share. Total revenues jumped 23% year over year to $8.56 billion. The top line outpaced the consensus estimate of $8.5 billion.
Lithia had cash/cash equivalents/restricted cash of $404.6 million as of Mar 31, 2024, down from $941.1 million as of Dec 31, 2023. Long-term debt was $5.7 billion as of Mar 31, 2024, up from $5.5 billion as of Dec 31, 2023.
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