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Advance Auto Parts (AAP) Earnings Miss in Q2, Decline Y/Y

Advance Auto Parts Inc. AAP reported a 16.8% decline in adjusted earnings to $1.58 per share in the second quarter of fiscal 2017 (ended Jul 15, 2017) from $1.90 earned in the prior-year quarter. The figure also missed the Zacks Consensus Estimate of $1.65. Adjusted net income declined to $117 million from $141 million in the second quarter of fiscal 2016.

Advance Auto Parts came up with revenues of $2.26 billion, almost in line with the Zacks Consensus Estimate.
 
Revenues were 0.3% higher than the year-ago quarter figure. During the quarter, comparable store sales (comps) were almost flat year over year.

Gross profit declined to $993.1 million in the reported quarter from $1.01 billion a year ago. Gross margin declined to 43.9% from 44.8% in the prior-year quarter primarily due to the non-cash accounting impact of the planned lowering down of the inventory, rise in supply chain costs, and unfavorable mix and commodity headwinds, which were partly offset by the company’s initiatives to boost material cost performance.

Adjusted selling, general and administrative (SG&A) expenses totaled $797.6 million or 35.2% of sales in the quarter under review compared with $767.1 billion or 34% in the second quarter of fiscal 2016.

Adjusted operating income fell to $195.5 million from $243.1 million in the prior-year quarter.

Dividend

On Aug 10, 2017, the board of directors of Advance Auto Parts declared a regular quarterly dividend of 6 cents per share. The dividend will be paid on Oct 6, 2017, to stockholders on record as of Sep 22, 2017.

Financial Position

Advance Auto Parts had cash and cash equivalents of $257.2 million as of Jul 15, 2017, up from $135.2 million as of Dec 31, 2016. Total long-term debt was $1.04 billion as of Jul 15, 2017, almost unchanged from the figure as of Dec 31, 2016.

For the fiscal second quarter, operating cash flow was $267.3 million compared with $208.4 million in the year-ago period.

Store Update

As of Jul 15, 2017, Advance Auto Parts operated 5,073 stores and 131 Worldpac branches and served approximately 1,250 independently owned Carquest stores.

Advance Auto Parts currently carries a Zacks Rank #5 (Strong Sell).

A few better-ranked automobile stocks are Fox Factory Holding Corp. FOXF, Cummins Inc. CMI and Ferrari N.V. RACE, each carrying a Zacks Rank #2 (Buy). You can see  the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory has a long-term growth rate of 16%.

Cummins has an expected long-term earnings growth rate of 12%.

Ferrari has an expected earnings growth rate of 14.1% in the long run.

Advance Auto Parts Inc Price, Consensus and EPS Surprise

Advance Auto Parts Inc Price, Consensus and EPS Surprise | Advance Auto Parts Inc Quote

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Fox Factory Holding Corp. (FOXF): Free Stock Analysis Report
 
Advance Auto Parts Inc (AAP): Free Stock Analysis Report
 
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Cummins Inc. (CMI): Free Stock Analysis Report
 
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