Core Viewpoint - Advance Auto Parts is facing significant challenges, including an 83% decline in stock price since early 2022, but potential opportunities may arise if the company successfully implements its restructuring efforts [1][2]. Group 1: Financial Performance - The company reported a full-year EPS of $0.50 for 2023, a substantial drop from $7.65 in 2022, indicating severe profit margin contraction [2]. - In Q2 2024, EPS was $0.75, which fell short of consensus estimates, with net sales growth remaining flat year over year and comparable store sales increasing by only 0.4% [2]. - For 2024, Advance Auto Parts anticipates comparable sales to range between -1% and 0%, with an EPS target of $2.00-$2.50 and a minimum of $100 million in free cash flow [2]. Group 2: Restructuring Efforts - The company is undergoing a major restructuring, including corporate layoffs, aimed at improving its cost structure and returning to profitable growth [2]. - The sale of its WorldPac automotive parts wholesale distribution business for $1.5 billion is expected to close by the end of the year, providing a significant cash infusion to strengthen the balance sheet [5]. Group 3: Market Position and Valuation - Advance Auto Parts operates a network of 4,776 stores, benefiting from a loyal customer base despite current challenges [4]. - The stock is trading at a forward P/E ratio of 18 for 2024, which narrows to 13 for 2025, indicating a potential valuation discount compared to competitors like AutoZone and O'Reilly Automotive [5].

Changes in the company's managerial structure raised concerns in the market.A pair of executive resignations led to a mild sell-off in Advance Auto Parts (AAP -0.51%) shares on Friday. The company's stock closed the day 0.5% lower on the news, on investor concern that the company's managerial structure might not be entirely stable. By comparison, the benchmark S&P 500 index landed in positive territory by rising 0.9%.Double resignationBefore market open that day, Advance revealed in a regulatory filing that ...

The auto parts retailer is, yet again, in turnaround mode.Shares in auto parts retailer Advance Auto Parts (AAP -3.24%) slumped by 28.5% in August, according to data provided by S&P Global Market Intelligence. The move comes after a disappointing second-quarter earnings report and a slew of analyst downgrades.Advance Auto Parts' problems continueNine years ago, renowned activist investor Starboard Value laid out the value case for Advance Auto Parts. It was made based on classic value investor principles. F ...

Investment Summary - Advance Auto Parts, Inc. (AAP) is rated as a hold due to the sale of Worldpac being positive for shareholders, but the stock is expected to trade at a discount relative to peers because of the gap in EBIT margin over the medium term [2]. Business Overview - AAP operates as an aftermarket parts provider for the automotive industry, with 4,776 stores as of 2Q24. The revenue breakdown is approximately 40% from DIY and 60% from Commercial segments [3]. 2Q24 Results Update - In 2Q24, net sales slightly decreased by 0.1% year-over-year to $2.68 billion, with comparable store sales growing by 0.4%. Gross margin fell by 93 basis points to 41.5%, primarily due to strategic pricing actions and higher product costs. Operating costs increased by 2.8% year-over-year to $1.04 billion, leading to an EBIT margin of 2.7%, which was 80 basis points below consensus estimates [4]. Worldpac Sale - AAP is set to sell its Worldpac business unit to Carlyle Group for $1.5 billion in cash, with net proceeds expected to be $1.2 billion after taxes and fees. The transaction is anticipated to close by FY24, which is seen as positive for shareholders as it allows for deleveraging and investment in turnaround initiatives [5][6]. Margin and EBITDA Analysis - Over the last twelve months, AAP generated approximately $359 million in GAAP EBITDA, with $100 million from Worldpac. Excluding Worldpac, AAP's EBITDA was around $259 million, indicating an EBITDA margin of approximately 2.8% and an EBIT margin of around 0.5%. Management aims to expand the EBIT margin to mid-single digits over the next two years, which is considered poor guidance compared to peers like AutoZone and O'Reilly, which have EBIT margins around 20% [7][8]. Strategic Pricing Investments - AAP is increasing its strategic pricing investments, adding an additional $60 million in 2Q24 to a previously announced $40 million, totaling $100 million annually. While this strategy may align with current consumer spending trends, there are doubts about its effectiveness in significantly changing the margin outlook [8]. Demand Trends - Demand trends are not favorable, with consolidated comparable sales growing by only 0.4% in the quarter, primarily driven by strong DIFM performance. The DIY segment continues to face pressure, and management has noted a softening in trends for both segments due to macroeconomic headwinds and a challenging comparison from the previous year [9]. Valuation - AAP currently trades at a forward P/E of 15x, compared to 26x for O'Reilly and 19x for AutoZone. This discount is justified due to the significant gap in EBIT margin and AAP's higher leverage ratio of 3.5x compared to peers [10]. Conclusion - The outlook for AAP remains a hold rating, as the company is likely to continue trading at a discount to peers due to lower EBIT margins, pressured near-term sales performance, and a higher leverage ratio [11].

When investors face the current volatility and uncertainty in the stock market, it might be hard to keep a cool head and stay away from the sell button. However, this is precisely when they should scour the market for better opportunities and deals. Keeping the fundamentals front and center will always help performance, especially when everyone gets scared.Three stocks stand out to reassure investors of good discounts on companies with solid fundamentals, even after the nontraditional leader, NVIDIA Co. NAS ...

Core Viewpoint - Advance Auto Parts (AAP) experienced a significant decline in stock price after a strong start in 2024, leading to a substantial loss for investors like Michael Burry, who managed to sell his shares before the downturn [1][2]. Group 1: Stock Performance - AAP shares were up 36% year-to-date by the end of Q1 2024, generating approximately $3 million in profit for Michael Burry [1]. - By August 28, 2024, AAP's stock had retraced almost 50% from its earlier highs, with the price dropping from around $80 in early April to $47.67 [1][2]. - The stock was approximately $63 on the last day of June 2024, indicating a significant decline from its peak [2]. Group 2: Investment Decisions - Michael Burry's timely sale of AAP shares allowed him to avoid potential losses, with estimates suggesting he could have saved up to $3 million had he sold in early April [2]. - Even if he sold at the end of Q2 2024, he would have avoided $1 million in losses due to the disappointing earnings report released in late August [4]. - Burry's original investment in AAP consisted of 70,000 shares, purchased when the stock was trading between $48 and $65 in Q4 2023, indicating a profitable trade unless he sold at the lowest point in Q2 2024 [5][6].

Shares of Advance Auto Parts (AAP) tumbled 20.6% in the last two trading sessions after it delivered dismal second-quarter results on Aug 22, before the opening bell. The stock closed at $49.15 on Friday, just 3% above its 52-week low of $47.73. At this juncture, investors must be wondering if it’s the right time to buy the stock given the dip.Now, this auto retail parts company has been suffering from quite some time. It missed earnings estimates in each of the trailing four quarters, with the average nega ...

Advance Auto Parts, Inc. (AAP) is struggling in a challenging retail environment. This Zacks Rank #5 (Strong Sell) recently missed on earnings for the 6th quarter in a row.Advance Auto Parks is an automotive aftermarket parts providers that serves both professional installers and do-it-yourself (DIY) customers.As of July 13, 2024, Advance Auto Parks operated 4,776 stores and 321 Worldpac branches mostly in the United States but with additional locations in Canada, Puerto Rico, and the US Virgin Islands. It ...

Advance Auto Parts, Inc. (AAP) reported adjusted earnings of 75 cents per share for the second quarter of 2024, which missed the Zacks Consensus Estimate of 97 cents. The company reported an adjusted earnings per share (EPS) of $1.43 in the year-ago quarter.Advance Auto generated net revenues of $2.68 billion, which marginally beat the Zacks Consensus Estimate of $2.67 billion on higher-than-expected comparable store sales. Comparable store sales increased 0.4% year over year. We projected a decline of 0.1% ...

Advance Auto Parts Inc. AAP reported weak second-quarter earnings and slashed FY24 outlook on Thursday.The company reported earnings per share of 75 cents, missing the street view of $1.07. Quarterly sales of $2.683 billion beat the street view of $2.679 billion.Advance Auto Parts revised its FY24 outlook, lowering its earnings per share forecast to $2.00 – $2.50 from the previous range of $3.75 – $4.25, which contrasts with the $3.63 estimate. Additionally, the company adjusted its sales projection to $11. ...