Advance Auto Parts Inc. (AAP): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
We are downgrading Advance Auto Parts to Neutral from Outperform based on weakening financial position and price competition. However, the company reported a 27.7% rise in adjusted comparable earnings to $1.89 per share in the third quarter of fiscal 2014, surpassing the Zacks Consensus Estimate of $1.87. Revenues went up 50.6% year over year to $2.29 billion, in line with the Zacks Consensus Estimate. Sales benefited from the General Parts takeover, increase in comparable same-store sales and the addition of new stores over the last 12 months. Advance Auto Parts expects comparable cash earnings per share to be in the range of $7.50 $7.60 for 2014. Store expansion and benefits from acquisitions are some positives.

Overview:

Advance Auto Parts, Inc. operates in the U.S. automotive aftermarket industry and is primarily engaged in selling replacement parts (excluding tires), accessories, batteries and maintenance items for cars, vans, sport utility vehicles and light trucks. It is the second leading retailer catering to the "do-it-yourself" or "DIY and "do-it-for me or "DIFM" (or Commercial) customers.

Advance Auto Parts operates under two reportable segments: Advance Auto Parts ("AAP") and Autopart International ("AI"). The AAP segment consists of stores in the U.S., Puerto Rico and the Virgin Islands under the trade names Advance Auto Parts and Advance Discount Auto Parts. The AI segment, an acquired business, operates as an independent and wholly owned subsidiary of the company. It provides automotive replacement parts to the DIFM market as well as to warehouse distributors and jobbers in the North American market.

As of Oct 4, 2014, Advance Auto Parts operated 5,305 stores and 109 Worldpac branches, and served approximately 1,350 independently owned Carquest stores.



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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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