Markets
SUP

Advance Auto Parts (AAP) Q4 Earnings: What's in Store?

Advance Auto Parts Inc.AAP is expected to report fourth-quarter and fiscal 2015 results on Feb 11. In the last quarter, the company posted a negative earnings surprise of 5.34%. Let's see how things are shaping up for this announcement.

Factors Influencing this Quarter

Advance Auto Parts drives profits through its relentless focus on store expansion. During the 40-week period ended Oct 10, 2015, Advance Auto Parts opened 80 stores. The rise in store count ensures increased availability of parts, thereby leading to higher sales. In addition, Advance Auto Parts expects adjusted earnings per share in the range of $7.75-$7.90 in fiscal 2015, up from $7.59 earned in fiscal 2014. Higher annual guidance raises hopes about an improvement in the company's fourth-quarter results as well.

However, Advance Auto Parts anticipates flat to slightly negative comparable store sales and flat gross margin rate in the fourth quarter. Further, earnings are expected to remain under pressure in the quarter due to the impact of integration activities. In addition, the company will incur one-time expenses of $10-$15 million in fiscal 2015 due to its plans to close 30 stores. This will adversely affect the quarterly and annual results of the company.

Earnings Whispers

Our proven model does not conclusively show that Advance Auto Parts is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1, 2 or 3 for this to happen. This is not the case here, as you will see below:

Zacks ESP: Advance Auto Parts has an Earnings ESP of 0.00%. This is because the Most Accurate estimate and the Zacks Consensus Estimate both stand at $1.21.

Zacks Rank: Advance Auto Parts carries a Zacks Rank #4 (Sell). We caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks to Consider

Here are some companies in the automobile sector you may want to consider as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Superior Industries International, Inc. SUP has an Earnings ESP of +11.11% and a Zacks Rank #1 (Strong Buy). The company is expected to release fourth-quarter and full-year 2015 earnings results on Mar 7.

BorgWarner Inc. BWA has an Earnings ESP of +2.78% and a Zacks Rank #3 (Hold). The company is expected to release fourth-quarter and full-year 2015 earnings results on Feb 11.

Magna International Inc. MGA has an Earnings ESP of +0.89% and a Zacks Rank #3. The company is expected to release fourth-quarter and full-year 2015 earnings results on Feb 26.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

ADVANCE AUTO PT (AAP): Free Stock Analysis Report

BORG WARNER INC (BWA): Free Stock Analysis Report

SUPERIOR INDS (SUP): Free Stock Analysis Report

MAGNA INTL CL A (MGA): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

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


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

In This Story

SUP MGA AAP BWA

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More