Earnings Report - Advance Auto Parts is set to release its second-quarter earnings results on August 14, with analysts expecting earnings of 58 cents per share, a decrease from 75 cents per share in the same period last year [1] - The projected quarterly revenue is $1.97 billion, down from $2.68 billion a year earlier [1] Debt Offering - On July 28, Advance Auto Parts announced the pricing of upsized senior notes totaling $1.95 billion, maturing in 2030 and 2033 [2] Stock Performance - Following the announcement of the debt offering, Advance Auto Parts shares increased by 4.6%, closing at $61.81 [2] Analyst Ratings - Wells Fargo analyst Zachary Fadem maintained an Equal-Weight rating and raised the price target from $35 to $45 [4] - Evercore ISI Group analyst Greg Melich maintained an In-Line rating and increased the price target from $56 to $58 [4] - Citigroup analyst Steven Zaccone maintained a Neutral rating and raised the price target from $49 to $60 [4] - DA Davidson analyst Michael Baker maintained a Neutral rating and increased the price target from $47 to $65 [4] - Goldman Sachs analyst Kate McShane downgraded the stock from Neutral to Sell, reducing the price target from $48 to $46 [4]

Wall Street analysts forecast that Advance Auto Parts (AAP) will report quarterly earnings of $0.59 per share in its upcoming release, pointing to a year-over-year decline of 21.3%. It is anticipated that revenues will amount to $1.99 billion, exhibiting a decrease of 25.8% compared to the year-ago quarter. The current level reflects an upward revision of 0.5% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reapprai ...

Group 1 - The overall earnings picture for Q2 remains strong and resilient, with an improving outlook for the current and upcoming quarters, particularly in the Tech sector [1][9] - A significant proportion of companies have exceeded Q2 EPS and revenue estimates, with 80.4% beating EPS estimates and 79.1% beating revenue estimates [3][10] - Total earnings for reported S&P 500 companies are projected to reach $582 billion for Q2, marking a new all-time quarterly record [14][12] Group 2 - The earnings growth rate for the S&P 500 is expected to be up +12.1% year-over-year, with a +6.2% increase in revenues when combining actual results and estimates [10][9] - The revisions trend has turned positive, especially for the Tech sector, with Q3 earnings expected to grow by +10.4% year-over-year [14][17] - Since the start of July, Q3 estimates have increased for 6 of the 16 Zacks sectors, with the most significant gains in the Tech, Finance, Energy, and Retail sectors [16]

Core Viewpoint - Advance Auto Parts is undergoing a turnaround plan, showing some positive signs despite facing significant competition and operational challenges [2][4][11]. Financial Performance - In Q1 2025, Advance Auto Parts reported net sales of $2.6 billion, a 7% decline, but exceeded its own guidance by approximately $80 million [4]. - The adjusted diluted earnings per share (EPS) was a loss of $0.22, surpassing the consensus estimate by $0.47 [4]. - The stock price increased by 57% following the Q1 results announcement [4]. Turnaround Strategy - The company aims to achieve positive operating margins by Q2, with guidance for adjusted operating income margin between 2.8% and 3% [5]. - Advance Auto Parts is consolidating its distribution network from 38 centers to 12 larger facilities to improve efficiency [11]. - The company has closed over 500 corporate stores and is expanding its network of "market hubs" to enhance parts availability and delivery speed [12]. Competitive Landscape - Advance Auto Parts has struggled with operational inefficiencies compared to competitors like AutoZone and O'Reilly Auto Parts, particularly in merchandising margins [7][8]. - The company is conducting line reviews with suppliers to improve profitability per part sold [8]. Market Response - Prior to a recent stock pullback, the share price had doubled from May 21 to July 21 [14]. - The forward price-to-earnings (P/E) ratio is 30, which is a premium compared to its median P/E over the past decade but at the midpoint relative to competitors [15][17]. Future Outlook - Investors are looking for further signs of progress in the restructuring plan when the company reports Q2 results on August 14 [19]. - The company has seen a 1% increase in comparable-store sales in areas with operational improvements from market hubs [13].

Core Viewpoint - Advance Auto Parts is expected to exceed Q2 revenue expectations, but concerns arise from its increasing debt levels and cash burn rate [1][4][5]. Group 1: Earnings Expectations - Advance Auto Parts anticipates Q2 revenue to surpass Wall Street's prediction of $1.97 billion, potentially reaching up to $2 billion [1]. - Same-store sales are projected to increase by approximately 0.1%, and adjusted operating margins could rise to 3% [3]. Group 2: Debt Issuance - The company announced the issuance of $1.5 billion in senior unsecured notes in two tranches, maturing in 2030 and 2033, to support its turnaround efforts [4]. - A portion of the new debt will be utilized to refinance existing debt due in 2026, with the remainder allocated for general corporate purposes [5]. Group 3: Financial Health Concerns - Advance Auto Parts is currently experiencing a cash burn rate exceeding $250 million annually, necessitating the new debt issuance [5]. - The company has not disclosed whether the new debt will carry higher or lower interest rates compared to the existing debt, complicating the assessment of its financial outlook [6]. - The overall debt load of Advance Auto Parts appears to be increasing, raising concerns about its financial stability [6].

[Form 8-K Current Report](index=1&type=section&id=Form%208-K) This Form 8-K reports Advance Auto Parts' preliminary Q2 2025 financial results and lists associated exhibits [Results of Operations and Financial Condition](index=2&type=section&id=Item%202.02%20Results%20of%20Operations%20and%20Financial%20Condition) Advance Auto Parts announced preliminary Q2 2025 financial results via a press release, furnished as Exhibit 99.1 and not legally "filed" - The company issued a press release on July 24, 2025, containing preliminary estimated financial results for the second quarter ending July 12, 2025[6](index=6&type=chunk) - The press release is furnished as **Exhibit 99.1** and is not deemed "filed" under the Securities Exchange Act, limiting its legal liability[6](index=6&type=chunk)[7](index=7&type=chunk) [Financial Statements and Exhibits](index=2&type=section&id=Item%209.01%20Financial%20Statements%20and%20Exhibits) This section details the exhibits accompanying the Form 8-K filing, primarily the press release and XBRL data Exhibit List | Exhibit No. | Exhibit Description | | :--- | :--- | | 99.1 | Press Release, dated July 24, 2025, issued by Advance Auto Parts, Inc. | | 101.1 | Inline XBRL for the cover page of the Current Report on Form 8-K. | | 104.1 | Cover Page Interactive Data File (embedded within Exhibit 101.1). |

Core Insights - The U.S. retail sector has shown resilience with a notable rebound in retail sales, indicating strong consumer spending despite price pressures and tariffs [1][4][6] Retail Sales Performance - Retail sales reached $720.1 billion in June, increasing by 0.6% month over month after a 0.9% decline in May, surpassing analysts' expectations of a 0.1% rise [4][9] - Year-over-year, retail sales rose by 3.9% in June, driven by increases in auto dealership sales (up 1.2%) and building material and garden equipment stores (up 0.9%) [4][6] - Online retail sales grew by 0.4%, while sales at sporting goods, hobby, and book stores increased by 0.2% [4] Economic Implications - The strong retail sales figures suggest that the economy remains robust, potentially influencing the Federal Reserve to delay interest rate cuts [2][6] - Tariff-driven price increases have contributed to the rise in retail sales, but market participants are optimistic about future trade deals mitigating negative impacts [7] Investment Opportunities - Five retail stocks have been identified as having growth potential due to positive earnings estimate revisions and strong Zacks Ranks: Amazon.com, Dollar Tree, Advance Auto Parts, Casey's General Stores, and Levi Strauss [2][3][9] - Amazon.com, Inc. has an expected earnings growth rate of 13.4% for the current year, with a Zacks Rank of 1 [10] - Dollar Tree, Inc. has an expected earnings growth rate of 7.8% and a Zacks Rank of 2 [12] - Advance Auto Parts, Inc. is projected to have an earnings growth rate of over 100%, also holding a Zacks Rank of 2 [14] - Casey's General Stores, Inc. has an expected earnings growth rate of 7.2% and a Zacks Rank of 2 [16] - Levi Strauss & Co. has an expected earnings growth rate of 4% and a Zacks Rank of 1 [18]

Company Performance - Advance Auto Parts (AAP) has returned 29.3% year-to-date, outperforming the average gain of 5.1% in the Retail-Wholesale sector [4] - The Zacks Consensus Estimate for AAP's full-year earnings has increased by 20% over the past three months, indicating improved analyst sentiment and earnings outlook [4] - AAP currently holds a Zacks Rank of 2 (Buy), suggesting a favorable investment outlook [3] Industry Context - Advance Auto Parts is part of the Automotive - Retail and Wholesale - Parts industry, which has an average gain of 12.2% year-to-date, indicating AAP's strong performance within its specific industry [6] - The overall Retail-Wholesale sector, which includes 204 individual stocks, is ranked 13 in the Zacks Sector Rank [2] - Another stock in the Retail-Wholesale sector, GMS, has also shown strong performance with a year-to-date increase of 29.5% and a Zacks Rank of 2 (Buy) [5]

Industry Overview - The Zacks Automotive - Retail and Wholesale - Parts industry involves retailing, distribution, and installation of vehicle parts and accessories, with options for consumers to choose between DIY and DIFM services [2] - The industry is highly competitive and is undergoing significant changes due to evolving customer expectations and technological innovations [2] Key Growth Drivers - The average age of vehicles in the U.S. has reached a record high of 12.6 years, increasing demand for auto parts as older vehicles require more maintenance [3] - Modern vehicles are becoming more complex, leading consumers to prefer professional repair services, thus boosting the DIFM segment [4] - Auto parts dealers are expanding through acquisitions and digital platforms, enhancing market presence and operational efficiency [5] Electric Vehicle Market Impact - U.S. EV sales reached a record 607,089 units in the first half of 2025, marking a 1.5% year-over-year increase, which is expected to provide a boost to auto parts retailers, especially those with EV-specific components [6] Industry Performance - The Zacks Auto Retail & Wholesale Parts industry ranks 63, placing it in the top 26% of 245 Zacks industries, indicating solid near-term prospects [7][8] - Over the past year, the industry has outperformed both the Auto, Tires and Truck sector and the S&P 500, with a growth of 17% compared to the S&P 500's 13% [10] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 27.27X, higher than the S&P 500's 17.7X and the sector's 21.01X [13] - The industry's EV/EBITDA ratio has fluctuated between 21.41X and 28.32X over the past five years, with a median of 24.67X [14] Company Highlights - **Advance Auto Parts (AAP)**: Focuses on selling replacement parts and has bolstered liquidity through the sale of its Worldpac business for $1.5 billion. The company aims to streamline operations and reduce costs through supply chain consolidation [18] - Advance Auto carries a Zacks Rank 2 (Buy), with a projected EPS growth of 752% year-over-year for 2025 [19] - **O'Reilly Automotive (ORLY)**: A leading player in the aftermarket auto parts space, known for 32 consecutive years of revenue growth. The company plans to increase inventory levels and has committed to share repurchases totaling $2.08 billion in 2024 [22] - O'Reilly Automotive holds a Zacks Rank 3 (Hold), with projected EPS growth of 5.4% for 2025 [23]

Company Performance - Advance Auto Parts (AAP) has shown a year-to-date performance increase of approximately 9.2%, outperforming the average gain of 5.2% in the Retail-Wholesale group [4] - The Zacks Consensus Estimate for AAP's full-year earnings has increased by 19.5% over the past 90 days, indicating improved analyst sentiment and a stronger earnings outlook [3] Industry Context - Advance Auto Parts is part of the Automotive - Retail and Wholesale - Parts industry, which consists of 7 individual stocks and currently ranks 92 in the Zacks Industry Rank [6] - The average gain for stocks in the Automotive - Retail and Wholesale - Parts industry this year is 13.3%, suggesting that AAP is slightly underperforming its industry [6] Sector Overview - The Retail-Wholesale sector includes 204 individual stocks and holds a Zacks Sector Rank of 11, reflecting the strength of the sector [2] - Another notable stock in the Retail-Wholesale group is Cracker Barrel Old Country Store (CBRL), which has returned 26.5% year-to-date and has a Zacks Rank of 1 (Strong Buy) [4][5]