AAP Earnings: Advance Auto Parts Rises on Q1 Release, Optimistic Outlook

Shares of Advance Auto Parts (NYSE:AAP) are on the rise today after the automotive aftermarket parts provider reported first-quarter results and issued a somewhat optimistic financial outlook.

During the quarter, AAP’s top line remained largely flat at $3.41 billion. The figure lagged expectations by a narrow margin of $20 million. Similarly, the company’s EPS of $0.67 missed the cut by a wafer-thin margin of $0.01.

AAP’s Signs of Improving Performance

The broader automotive industry is facing challenging times at present. As a result, AAP’s comparable store sales declined by 2%, and its gross margin contracted by 82 basis points to 42% due to higher costs.

At the same time, the company’s focus on streamlining its operations enabled it to lower its SG&A expenses as a percentage of net sales to 39.4% from 39.9%. Recently, AAP has reduced its headcount and moderated its marketing expenses. Additionally, AAP has lowered its store count to 5,097 from 5,107 at the end of December 2023.

Advance Auto Parts’ Financial Outlook

Next, AAP is focusing on improving its supply chain and lowering its cost structure. For Fiscal year 2024, the company anticipates an EPS of $3.75-$4.25 on net sales of $11.3-$11.5 billion. Previously, it anticipated net sales of $11.3-$11.4 billion for the year. Comparable store sales growth is foreseen in the flat to 1% range during this period.

Separately, AAP has declared a dividend of $0.25 per share. The AAP dividend is payable on July 26 to investors of record on July 12.

What Is the Price Target for AAP Stock?

Today’s price gains further add to the nearly 37% rise in Advance Auto Parts’ share price over the past six months. Overall, the Street has a Hold consensus rating on the stock, alongside an average AAP price target of $67.33. However, analysts’ views on the stock could see a revision following today’s earnings report.

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