Advance Auto Parts (NYSE:AAP) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Advance Auto Parts, Inc. (NYSE:AAP) is scheduled to report Q3 earnings results before markets open for trading on November 10, 2020.

The company is expected to report earnings of $2.67/share on revenue of $2.476 billion. The consensus earnings per share (EPS) of $2.67/share is based on a poll of 23 analysts and represents a growth in eps of 27.1% over the same quarter last year, when the company reported earnings of $2.10/share.

The revenue forecast of $2.476 billion based on a poll of 21 analysts implies a year-over-year (YoY) growth in revenue of 7.1%. Last year the company reported $2.312 billion in revenue for the quarter.

Expected to report EPS growth of 27.1% for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $2,476.36 $2,312.11 7.1%
EPS $2.67 $2.10 27.1%

Earnings Call Trends

Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and missed expectations 2 quarters.

What are your expectations from Advance Auto Parts, Inc. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 $1.97 $2.92 48.6% Beat
Q1, 2020 $1.59 $0.91 −42.7% Missed
Q4, 2019 $1.35 $1.64 21.5% Beat
Q3, 2019 $2.05 $2.10 2.2% Beat
Q2, 2019 $2.21 $2 −9.4% Missed
Q1, 2019 $2.37 $2.46 3.7% Beat
Q4, 2018 $1.13 $1.17 3.7% Beat
Q3, 2018 $1.76 $1.89 7.6% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending July 11, 2020, the stock price did not react much to the update.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 18, 2020 $161 $160.81 −0.1% Decline
May 19, 2020 $131.11 $135.72 3.5% Increase
February 18, 2020 $133.59 $140.12 4.9% Increase
November 12, 2019 $168.82 $158.58 −6.1% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −2.56, the model suggests that the company is not likely to be an earnings manipulator. A value of −2.56 implies a 0.5% chance of earnings manipulation.

Fundamentals And Technical Analysis

Advance Auto Parts, Inc. is currently trading at $156.38/share, down 0.0% for the day. The company is trading at approximately 91.2% of its 52-week high of $171.43/share. The company’s stock price is down −2.8% since the last earnings report and up 3.3% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 57.33 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:AAP Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of 23.70 and a forward P/E multiple of 18.35.

Advance Auto Parts, Inc.’s current share price also implies a price-to-book (P/B) multiple of 2.88. The following table summarizes some other key fundamental ratios:

Data as of November 8, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date July 11, 2020
Stock Price (Current) $156.38
P/E Ratio 23.7x
P/E Ratio (Fwd) 18.4x
PEG Ratio 2.8
Total Debt / Total Capital 25.7%
Levered Free Cash Flow $524.1 million
EV / EBITDA 14.0x

Finbox

Advance Auto Parts, Inc. is a large-cap stock with a market capitalization of $10.74 billion and a total enterprise value of $13.311 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. The company offers battery accessories; belts and hoses; brakes and brake pads; chassis and climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wires; radiators and cooling parts; starters and alternators; and steering and alignment parts. It also offers air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluids; electrical wires and fuses; electronics; floor mats, seat covers, and interior accessories; hand and specialty tools; lighting products; performance parts; sealants, adhesives and compounds; tire repair accessories; vent shades, mirrors and exterior accessories; washes, waxes and cleaning supplies; and wiper blades. In addition, the company offers air filters; fuel and oil additives; fuel filters; grease and lubricants; motor oils; oil filters, part cleaners and treatments; and transmission fluids for engine maintenance. Further, it offers battery and wiper installation; engine light scanning checking; electrical system testing; video clinic; oil and battery recycling; and loaner tool program services. Additionally, the company sells its products through its Website. It serves professional installers and do-it-yourself customers. Advance Auto Parts, Inc. operates its stores under the Advance Auto Parts, Autopart International, Carquest, and Worldpac brand names. As of December 28, 2019, it operated 4,877 stores and 160 branches in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada; and served 1,253 independently owned Carquest branded stores in Mexico, the Bahamas, Turks and Caicos, and the British Virgin Islands. The company was founded in 1929 and is based in Raleigh, North Carolina.

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