Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are unde ...

Advance Auto Parts, Inc. (AAP) reported an adjusted loss of 22 cents per share for the first quarter of 2025, narrower than the Zacks Consensus Estimate of a loss of 81 cents. The company reported adjusted earnings of 67 cents per share in the year-ago quarter.Advance Auto generated net revenues of $2.58 billion, which topped the Zacks Consensus Estimate of $2.50 billion. Comparable store sales decreased 0.6% year over year. We projected a decline of 2% for the same. The top line decreased from $2.77 billio ...

Advance Auto Parts (AAP) Q1 2025 Earnings Call May 22, 2025 08:00 AM ET Speaker0 Good morning, and thank you for participating in today's call. I'm joined by Shane O'Kelly, President and Chief Executive Officer and Ryan Grimsland, Executive Vice President and Chief Financial Officer. During today's call, we will be referencing slides, which are available to view via webcast. The slides have also been posted to our Investor Relations website. Before we begin, please be advised that management's remarks today ...

Core Insights - The article discusses the impact of stock splits and artificial intelligence (AI) on market performance, highlighting that AI could add $15.7 trillion to the global economy by 2030 [1][2]. Stock Splits - Stock splits are a method used by publicly traded companies to adjust their share price and outstanding share count without affecting market capitalization or operating performance [4]. - There are two types of stock splits: forward and reverse, with forward splits being favored by successful companies, while reverse splits are typically used by struggling firms [5][6]. - Historically, companies that have enacted forward splits have averaged a 25.4% return in the 12 months following the announcement, significantly outperforming the S&P 500 [7]. Recent Stock Splits - In 2024, numerous prominent companies, including Nvidia, Broadcom, Walmart, and Chipotle, completed stock splits, with only one being a reverse split [8]. - In 2025, the trend continues with non-tech companies announcing forward splits, although the pace has been slower compared to 2024 [9]. Company-Specific Insights - O'Reilly Automotive announced a 15-for-1 forward split, reducing its share price from approximately $1,382 to around $92, benefiting from the aging vehicle market in the U.S. [10][11]. - O'Reilly has executed a significant share-repurchase program, spending nearly $26 billion to buy back over 59% of its outstanding shares since 2011, positively impacting earnings per share [12]. - Interactive Brokers announced a 4-for-1 forward split, marking its first in history, and has seen growth in key performance metrics since the 2022 bear market [13][15]. Fastenal's Performance - Fastenal completed a 2-for-1 stock split, marking its ninth split in 37 years, with its stock rising by 130,700% since its IPO in 1987 [18][19]. - The company's sales are closely tied to the health of the U.S. and global economy, with 73% of first-quarter sales coming from its contract segment, indicating strong customer relationships [20][21]. - Fastenal's total return since its IPO reflects its integration into customer supply chains, utilizing managed-inventory solutions to enhance cost efficiencies [22].

Investment Rating - The report maintains an "Overweight" (OW) rating for Denso, Aisin, and Nifco, while downgrading Jiangsu Hengli Hydraulic to "Neutral" [6][8]. Core Insights - The report emphasizes a structural increase in defense spending, with upcoming catalysts such as the NATO summit in June likely to agree on higher defense budgets [1]. - Denso's price target is lowered to ¥2,300 due to slowing earnings growth and tariff impacts, while Aisin is still viewed as a core auto parts stock despite revisions [4][8]. - Bharat Electronics is noted for stronger margins, with a revenue of ₹91.5 billion reported, slightly below expectations but with significant EBITDA growth [7][8]. Summary by Relevant Sections Japan Auto - Denso's price target is revised down to ¥2,300 from ¥2,400, reflecting a change in growth potential due to sluggish demand for BEVs and stagnant HEV inverter sales [4][6]. - Aisin's estimates are revised down due to tariff impacts and production cuts, but it is still expected to see significant growth in electric-drive parts sales [8]. - Nifco is expected to maintain stable profit growth despite tariff uncertainties, with a lowered price target of ¥4,600 from ¥4,700 [8]. Bharat Electronics - Bharat Electronics reported revenue of ₹91.5 billion, which was 2% below JP Morgan's estimates but 3% above consensus [7]. - The EBITDA margin improved to 30.8%, significantly above expectations, indicating strong operational performance [7]. Jiangsu Hengli Hydraulic - Jiangsu Hengli Hydraulic's estimates are cut by approximately 9% on average, with a downgrade to "Neutral" due to balancing growth prospects with ramp-up costs and trade policy uncertainties [8]. - The company is currently trading at a P/E of 35x/30x for FY25/26E, reflecting a balanced view amid opportunities and challenges [8]. General Market Sentiment - Investor sentiment remains strong for Bharat Electronics, driven by expectations of benefiting from increased Indian defense spending [8]. - The report highlights the importance of strategic initiatives such as factory automation and production shifts to Mexico for maintaining competitiveness in the US market [8].

Core Viewpoints - The automotive sector is expected to continue its upward trend, driven by three main themes: AI robotics, AI intelligence, and favorable market conditions [4][8] - The market showed strong performance in the automotive sector, with passenger vehicles and components leading the gains, influenced by better-than-expected adjustments in US-China tariffs and previous significant corrections in the automotive market [4][8] Weekly Review Summary - In the second week of May, the number of compulsory insurance policies reached 443,000 vehicles, reflecting a week-on-week increase of 6.5% and a month-on-month increase of 29.8% [2][7] - The SW automotive index rose by 2.4%, with the best-performing segments being SW passenger vehicles (+4.4%) and SW automotive components (+2.2%), while commercial vehicles and motorcycles showed declines [2][7] Key Industry Changes - Weipai New Energy launched the 2025 model of the Gaoshan vehicle, equipped with the Coffee Pilot Ultra intelligent driving assistance system [3][7] - BYD was added to the Hang Seng Technology Index [3][7] - Geely Automobile reported Q1 2025 revenue of 72.5 billion yuan, a year-on-year increase of 24.5%, and a net profit of 5.67 billion yuan, up 263.4% year-on-year [3][7] - The acquisition of 100% equity in Wuhu Changpeng was completed, and the company was renamed Wuhu Top [3][7] - Baolong Technology's second phase of the 4.8MW distributed photovoltaic project in Ningguo was completed and accepted [3][7] Sector Configuration Recommendations - The company maintains a positive outlook for 2025, focusing on three main themes: AI robotics, AI intelligence, and favorable market conditions, with the robotics theme expected to have the highest elasticity in May [5][8] - Recommended stocks for the AI robotics theme include Top Group, Junsheng Electronics, and Precision Forging Technology [5][8] - For the AI intelligence theme, preferred stocks include Xpeng Motors, Li Auto, and Xiaomi in Hong Kong, and Seres, SAIC Motor, and BYD in A-shares [5][8] - The favorable market conditions theme includes recommendations for bus manufacturers like Yutong Bus and heavy-duty trucks like China National Heavy Duty Truck and Weichai Power [5][8] Market Performance Tracking - The automotive sector ranked third in A-shares and first in Hong Kong this week, with strong performances in passenger vehicles and components [12][21] - The automotive sector's performance in the SW index showed significant gains, with passenger vehicles leading the way [15][21] Sales Data Overview - In April, the total number of passenger vehicles insured was 443,000, with a year-on-year increase of 29.8% [44] - New energy vehicles accounted for 222,000 units, with a penetration rate of 50.2% [44]

Market Overview - The Russell 2000 index, a benchmark for small-cap stocks, has increased by approximately 3.8% this week and 15.7% over the past month, indicating strong momentum in the small-cap sector [1] Interest Rates and Tariffs - Small-cap stocks are sensitive to interest rates, as many rely on debt for operations, making it challenging to absorb higher tariff charges. Interest rates may not decrease as quickly as anticipated, and while progress in U.S.-China tariff negotiations is noted, a finalized agreement is still pending [2] Volatility and Investment Opportunities - Investors should prepare for increased volatility in the next 90 days, but several small-cap stocks mentioned have strong investment potential regardless of tariff and interest rate fluctuations [3] Advance Auto Parts (AAP) - AAP has a 12-month stock price forecast of $45.13, representing a potential upside of 31.10% from its current price of $34.42. Analysts suggest a consensus Hold rating based on 17 ratings [4][5] - The stock is trading near its 52-week low but has risen over 5% in the past week, with a high short interest of over 17%, indicating potential for a short squeeze [6] - AAP's turnaround plan, including closing underperforming stores, is showing positive results, particularly in improving its balance sheet [7] La-Z-Boy (LZB) - LZB has a 12-month stock price forecast of $44.50, indicating a modest upside of 1.00% from its current price of $44.06. The stock has seen a 20% increase this year, partly due to its "Made in America" positioning [9][11] - The company is relatively insulated from tariffs, with much of its production in the U.S., although one-third of its products are still exposed to China [10] - LZB's stock is trading at around 14.9x earnings, which is considered somewhat expensive, but it has recently received an upgrade from KeyCorp with a price target of $46 [11] National Vision Holdings (EYE) - EYE has a 12-month stock price forecast of $17.57, suggesting a downside of 5.53% from its current price of $18.60. The stock was recently upgraded to a Buy from Underperform by Bank of America, with a new price target of $22 [12][13] - The company is implementing a strategic plan that includes price increases of 10% to 15%, which consumers have not resisted so far. However, it anticipates increased costs of $10 to $15 million due to its exposure to China [14] - Following the upgrade, EYE's stock has risen over 50%, prompting a cautionary note for investors to consider waiting for a pullback before investing [15]

Market Overview - As of May 16, 2025, the Shanghai Composite Index closed down 0.40% at 3367.46 points, while the Shenzhen Component Index fell 0.07% to 10179.60 points, and the ChiNext Index decreased by 0.19% to 2039.45 points, indicating a broad loss effect in the market [1] - The total trading volume across both markets reached 1.09 trillion yuan [1] Sector Performance - The top three sectors with gains were passenger cars (up 2.28%), auto parts (up 1.95%), and accessories (up 1.87%) [1] - The sectors with the largest declines included fisheries (down 2.27%), insurance (down 1.52%), and cosmetics (down 1.43%) [1] ETF Performance - A total of 323 non-currency ETFs rose, with an increase ratio of 28% [1] - The National Index Hong Kong Stock Connect Innovative Drug Index rose by 2.20%, with various related ETFs also showing gains, including the Hong Kong Innovative Drug ETF (up 2.62%) and the Hong Kong Stock Connect Innovative Drug ETF (up 2.35%) [1] - The latest share size of the Hong Kong Innovative Drug ETF reached 1.172 billion shares, closely tracking the National Index Hong Kong Stock Connect Innovative Drug Index [2] Valuation Metrics - The latest price-to-earnings ratio (PE-TTM) for the National Index Hong Kong Stock Connect Innovative Drug Index is 24.83, which is lower than 1.22% of the time over the past three years [3] - The latest PE-TTM for the Hang Seng Innovative Drug Index is 23.51, also below 2.74% of the time over the past three years [3] Declining ETFs - A total of 730 non-currency ETFs declined, with a decrease ratio of 64% [3] - The top three ETFs with the largest declines included the Engineering Machinery ETF (down 10.00%), the Innovation 50 ETF (down 4.91%), and the New Economy ETF (down 3.99%) [5] Premium Rates - The S&P 500 Consumer Select Index showed a premium of 26.71%, while the S&P 500 Index had a premium of 13.82% [6] - The top three ETFs with the highest premium rates included the S&P Consumer ETF (26.71%), the S&P 500 ETF (13.82%), and the Saudi ETF (5.29%) [8]

Financial Data and Key Metrics Changes - The company reported $800 million in bookings for Q1 and forecasts $5 billion in bookings for the full calendar year [11] - North America operations generated $2.2 billion in revenue during 2024, with $1.3 billion from U.S. operations and $900 million from Mexico operations [18] Business Line Data and Key Metrics Changes - The company achieved 23 new program launches in Q1, including 14 for battery electric vehicle platforms and 19 for new or conquest business [7] - Electric powered steering accounted for 36% of new business bookings, while columns accounted for 45% [11] Market Data and Key Metrics Changes - Nearly 40% of total bookings are from China OEMs, indicating alignment with growth megatrends in China [12] - The company is experiencing strong customer schedules in North America, with no significant changes related to recent tariff impacts [30] Company Strategy and Development Direction - The company is focusing on motion by wire technology, which is central to long-term growth and aligns with the shift from hydraulic to electric systems [22] - The strategy includes expanding into steer by wire and brake by wire technologies, with expectations for increased bookings in the China market [23] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about navigating the dynamic tariff environment and expects above-market revenue growth of 200 to 300 basis points year over year [20] - The company is closely monitoring tariff developments and their implications on North American production volume [21] Other Important Information - The company has successfully resecured an important column business with a North American customer, which had been lost to a competitor [10] - The company is actively working to mitigate tariff costs through changing sourcing locations and negotiating recoveries with customers [20] Q&A Session Summary Question: Updates on the latest trend in the North America market - Management noted that North America volumes are performing according to expectations, with strong customer schedules in the near term [26][28] Question: Changes in customer order trends due to new tariffs - Management indicated that customer production schedules remain strong and have not changed significantly due to the new tariffs [30] Question: Clarification on USMCA tariff compliance - Management confirmed that to be USMCA compliant, 75% of content must come from North America, and compliant goods can be imported with zero tariffs [32][33]

Financial Data and Key Metrics Changes - In Q1 2025, the company achieved record bookings of $800 million and forecasts total bookings of $5 billion for the full year [12][22] - North America operations generated $2.2 billion in revenue during 2024, with $1.3 billion from U.S. operations and $900 million from Mexico operations [19] Business Line Data and Key Metrics Changes - The company launched 23 new programs in Q1 2025, including 14 for battery electric vehicle platforms and 19 for new or conquest business [8] - Electric powered steering accounted for 36% of new business bookings, while columns accounted for 45% [12] Market Data and Key Metrics Changes - Nearly 40% of total bookings are from China OEMs, indicating alignment with growth megatrends in China [12] - The company is experiencing strong demand for by-wire technology, particularly in the China market [24] Company Strategy and Development Direction - The company is focused on expanding its motion by wire technology, which includes steer by wire and brake by wire systems, to enhance precision and efficiency in EV platforms [15][23] - The strategy includes reducing fixed costs, optimizing footprint, and improving supply chain efficiency to drive margin expansion [22] Management's Comments on Operating Environment and Future Outlook - Management acknowledges ongoing challenges such as a dynamic tariff environment and supply chain restrictions but remains optimistic about strong customer schedules and revenue growth [6][30] - The company is well-positioned to navigate tariff impacts and is actively working with customers to mitigate costs [22] Other Important Information - The company successfully resecured an important column business with a North American customer, which had been lost to a competitor [11] - The company expects to start production of rear wheel steering contracts with leading Chinese OEMs in 2026 [14] Q&A Session Summary Question: Updates on the latest trend in the North America market - Management noted that year-to-date volumes in North America are performing according to expectations, with strong customer schedules [27][30] Question: Changes in customer order trends due to new tariffs - Management indicated that customer production schedules remain strong and have not changed significantly due to the new tariffs [31] Question: Clarification on USMCA tariff compliance - Management confirmed that for USMCA compliant shipments, there is no tariff if 75% of content comes from North America; otherwise, a 25% tariff applies [33][34]