Earnings Preview: Advance Auto Parts

Advance Auto Parts (AAP) is expected to report Q2 earnings after market close Wednesday, August 6, with a conference call scheduled for Thursday August 7 at 10:00 a.m. ET.

Guidance

Analysts are expecting a profit of 72c on revenue of $1.21B. The consensus range for EPS is 70c to 73c with a revenue range of $1.20B to $1.21B, according to First Call. In Q1, the company reported EPS 86c as compared to a consensus of 76c, and Q1 revenue $1.53B as compared to consensus of $1.51B. Possible positive drivers for the quarter include increasing commercial sales and aggressive new store openings. Negative issues for this earnings period still include an economic slowdown and higher fuel prices.

Analyst Views

On July 1, Merrill Lynch reinstated the stock with an Underperform rating and a $37 price target. On July 18, RBC Capital noted that it believes the company's commercial delivery business will be able to generate comp growth in the 8% to 10% range for the next several quarters. They upgraded the stock to Top Pick from Outperform. On August 5, JP Morgan believes the Street is underestimating the new management's ability to drive DIFM sales, improve gross margin, and control expenses. The firm sees upside to Q2 estimates and expects estimates to move higher for Q3 and Q4. The firm maintains an Overweight rating on the stock.