What's in the Offing for Advance Auto Parts (AAP) Q4 Earnings?

Advance Auto Parts, Inc. AAP is slated to release fourth-quarter 2019 results on Feb 18, before the opening bell.

The leading provider of automotive parts posted better-than-expected results in the last reported quarter owing to solid revenues and stellar year-over-year comparable store sales.

Over the trailing four quarters, the company surpassed the Zacks Consensus Estimate on three occasions and missed in the other, the average negative surprise being 0.40%. This is depicted in the graph below:

Advance Auto Parts, Inc. Price and Consensus

Advance Auto Parts, Inc. Price and Consensus

Advance Auto Parts, Inc. price-consensus-chart | Advance Auto Parts, Inc. Quote

Which Way are Top- and Bottom-Line Estimates Headed?

The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) has been unrevised over the past 30 days at $1.36. This suggests an improvement over the year-ago quarter’s reported earnings of $1.17 per share. The Zacks Consensus Estimate for revenues is pegged at $2.12 billion, suggesting a rise from the prior-year reported figure of $2.11 billion.

Factors Setting the Tone

Advance Auto Parts expanded and optimized its footprint through new stores, widening online presence and collaborations in the fourth quarter. The upcoming quarterly results will likely reflect the impact of these positives. In December 2019, the company acquired Sears’ DieHard brand, which is expected to have helped the auto parts retailer grow its portfolio of brands and drive more traffic to its stores.

However, the company’s huge capex for store openings, partnerships and investments to strengthen supply chain are likely to have flared up expenses in the quarter under review. Moreover, rise in raw-material (especially aluminium and steel) costs amid trade tariffs is might have clipped the firm’s profit margin.

Also, improvement in the quality of new vehicles is expected to have resulted in reduced need for maintenance and repair of parts, in turn, slashing demand in the automotive maintenance market during the period in discussion. This is likely to have marred demand for Advance Auto Parts’ products in the quarter.

What the Zacks Model Says

Our proven model does not conclusively predict an earnings beat for Advance Auto Parts this time around. The 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. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Advance Auto Parts has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $1.36.

Zacks Rank: Advance Auto Parts currently carries a Zacks Rank of 4 (Sell).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks to Consider

Here are some companies, which, according to our model, have the right combination of elements to post an earnings beat in the to-be-reported quarter.

LKQ Corporation LKQ is scheduled to report fourth-quarter figures on Feb 20. The stock has an Earnings ESP of +1.68% and carries a Zacks Rank #3, currently.

Visteon Corporation VC is set to release quarterly numbers on Feb 20. The company has an Earnings ESP of +2.63% and carries a Zacks Rank of 3, at present.

Magna International Inc. MGA has an Earnings ESP of +1.06% and is a Zacks #3 Ranked player. The company is slated to report quarterly results on Feb 21.

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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 Nasdaq, Inc.

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