Will Advance Auto (AAP) Q2 Earnings Sustain The Beat Streak?

Advance Auto Parts, Inc. AAP is slated to announce second-quarter 2022 results on Aug 23, after the closing bell. The Zacks Consensus Estimate for the quarter's earnings and revenues is pegged at $3.75 per share and $2.75 billion, respectively.

The Zacks Consensus Estimate for Advance Auto Parts' second-quarter earnings per share has been revised downward by 2 cents in the past 30 days. The bottom-line projection, however, implies year-over-year growth of 10.3%. The Zacks Consensus Estimate for quarterly revenues suggests an increase of 3.7% on a year-over-year basis.  

This aftermarket auto parts distributor delivered better-than-anticipated earnings in the last reported quarter on higher-than-expected comparable store sales growth. Over the trailing four quarters, Advance Auto Parts surpassed estimates on all occasions, with the average surprise being 9.23%.

What Does Our Model Say?

Our proven model predicts an earnings beat for Advance Auto Parts this time around as well. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.

Earnings ESP: Advance Auto Parts has an Earnings ESP of +0.48%. This is because the Most Accurate Estimate is pegged 2 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: Advance Auto Parts currently carries a Zacks Rank of 3.

Factors to Note

Increasing customer demand for personal vehicles is anticipated to have fueled the demand for automotive replacement parts, accessories, batteries and maintenance items. Advance Auto Parts' upcoming results are likely to get a boost from the same.

AAP is also likely to have gained from the digital ramp-up and rising e-commerce initiatives. The significant advancement of its DIY omni-channel digital platform and enhancements to the online portal, MyAdvance, are expected to have increased traffic and resulted in higher conversion rates, which are likely to have boosted revenues during the quarter in discussion. The consensus mark for comparable same-store sales growth for the quarter is 2.30%, indicating an increase from 0.60% recorded in the last quarter.

The completion of the rollout of cross-banner replenishment is likely to have delivered savings. The firm's Warehouse Management Systems and Labor Management System initiatives remained on track and are expected to have driven productivity.

AAP's second-quarter results are likely to reflect the benefits from its strengthening foothold through the opening of new stores. The Zacks Consensus Estimate for the total number of retail stores at second quarter-end is pegged at 5,016, indicating growth from the last quarter and the year-ago quarter's store count of 4,998 and 4,963, respectively.

The upbeat 2022 sales and profit outlook sparks optimism for the upcoming results. Advance Auto estimates 2022 net sales in the band of $11.2-$11.5 billion, up from 2021 sales of $10.99 billion. Adjusted EPS is forecast between $13.30 and $13.85, up from $12.02 in 2021. 

How Did ORLY Fare in Q2?

Advance Auto's close peer O'Reilly Automotive ORLY reported second-quarter 2022 adjusted earnings per share of $8.78, missing the Zacks Consensus Estimate of $8.98.The bottom line, however, increased 5.4% from $8.33 recorded in the prior-year quarter. O'Reilly registered quarterly revenues of $3,670.7 million, missing the consensus mark of $3,696 million. The top line, however, was nearly 6% higher than the prior-year figure of $3,465.6 million.

During the quarter, ORLY opened 62 new stores in the United States. It did not open any new stores in Mexico. The total store count was 5,900 as of Jun 30, 2022. The company had cash and cash equivalents of $253.9 million at the end of the second quarter, falling from $631.6 million in the year-ago quarter. Its long-term debt was $4,669.8 million, higher than the year-ago level of $3,825.2 million.
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