Advance Auto Parts, Inc. AAP will release earnings results for its third quarter, before the opening bell on Thursday, Nov. 14.Analysts expect the Raleigh, North Carolina-based company to report quarterly earnings at 54 cents per share, versus a year-ago loss of 82 cents per share. Advance Auto Parts projects to report revenue of $2.67 billion for the quarter, compared to $2.72 billion a year earlier, according to data from Benzinga Pro.On Nov. 4, Advance Auto Parts announced the close of the sale of Worldp ...

Analysts on Wall Street project that Advance Auto Parts (AAP) will announce quarterly earnings of $0.52 per share in its forthcoming report, representing an increase of 163.4% year over year. Revenues are projected to reach $2.67 billion, declining 2% from the same quarter last year.The consensus EPS estimate for the quarter has undergone an upward revision of 28.8% in the past 30 days, bringing it to its present level. This represents how the covering analysts, as a whole, have reassessed their initial est ...

Advance Auto Parts (AAP) is expected to deliver a year-over-year increase in earnings on lower revenues when it reports results for the quarter ended September 2024. This widely-known consensus outlook gives a good sense of the company's earnings picture, but how the actual results compare to these estimates is a powerful factor that could impact its near-term stock price.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to be released on No ...

Core Viewpoint - Advance Auto Parts is undergoing a significant turnaround plan, bolstered by a $1.2 billion cash influx from the sale of its Worldpac business, which is expected to enhance its financial flexibility and operational efficiency [1][2][4]. Group 1: Company Overview - Advance Auto Parts has a market capitalization of $2.4 billion, significantly smaller than competitors Autozone and O'Reilly, which have market caps of $53 billion and $71 billion respectively [1]. - Advance operates nearly 4,800 locations, while Autozone and O'Reilly have approximately 7,400 and 6,200 locations respectively, indicating that the size disparity does not fully justify the market valuation differences [1]. Group 2: Financial Transactions - Advance sold its Worldpac business for $1.5 billion, netting approximately $1.2 billion after transaction expenses, which is about half of its current market cap [2]. - Worldpac generated $2.1 billion in trailing-12-month revenue and $100 million in EBITDA, leading to a sales price of 0.7 times its sales and 15 times its EBITDA [2]. Group 3: Performance Metrics - Advance's stock trades at 0.2 times sales and about 7 times EBITDA, indicating that the sale of Worldpac was at a premium compared to its current stock valuation [3]. - Over the past decade, Advance has averaged an operating margin of about 6%, significantly lower than Autozone and O'Reilly, which have maintained margins between 18% and 20% [4]. Group 4: Strategic Changes - The new CEO, Shane O'Kelly, is focusing on restructuring the supply chain to address profitability issues, which is seen as crucial for improving returns for shareholders [5][6]. - If Advance can achieve a 10% operating margin, it could generate close to $1 billion in annual profits, with potential for the stock to quadruple in value if valued at 10 times its operating profit [5]. Group 5: Financial Position - Advance has approximately $1.8 billion in long-term debt and less than $500 million in cash and equivalents, indicating a challenging net-debt position [6]. - The sale of Worldpac is expected to improve Advance's balance sheet and provide management with the necessary flexibility to make strategic decisions for long-term success [6].

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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].