Advance Auto Parts to announce earnings

What's Happening With AAP View more about AAP >

Auto-parts retailer Advance Auto Parts (AAP) is expected to post its quarterly results after the market closes on February 9. Analysts forecast fourth-quarter earnings of $1.09 per share, down from $1.32 during the same period last year. The stock has been trending lower over the last two months, and shares are currently down 4.4% on the year.

Technical Analysis

AAP was recently trading at $163.09, down $14.74 from its 12-month high and $31.50 above its 12-month low. Technical indicators for AAP are bearish and the stock is a weak downward trend. The stock has recent support above $159.70, and has resistance below $168.50. Of the 18 analysts who cover the stock, six rate it a “strong buy”, two rate it a “buy”, eight rate it a “hold”, and two rate it a “strong sell”. The stock receives S&P Capital IQ’s 2 STARS “Sell” ranking.

Analysts' Thoughts

AAP has been trending lower over the last month, and the stock could use a solid earnings report to bring back investor enthusiasm. The company’s third-quarter report was solid, with results topping estimates on both the top and bottom lines, but the stock rose too sharply on the news, and has recently been giving back some of those gains. If AAP is able to follow up last quarter’s report with another solid set of numbers, I would expect to see the stock quickly erase a large portion of its recent losses. Analysts remain upbeat, setting a price target of $177.69 on the stock, which is 8.9% above its current trading price. Despite the bullish price target, the stock’s recent weakness suggests that Wall Street will drive the stock even lower if the company’s quarterly numbers disappoint.

The biggest concern right now for both Advance Auto and its biggest competitor AutoZone (AZO) is that Amazon (AMZN) is trying to aggressively move into the market. Amazon has recently made deals with some of the largest auto parts makers, and the news of these contracts hurt shares of all the major auto parts retailers. The good news for the sector is that a lot of parts are purchased in stores only after some assistance has been made by a sales rep, and a lot of the parts are very time sensitive and needed to keep cars on the road. Amazon is a concern, but it is not an immediate threat, and investors will come back into AAP as long as the quarterly numbers are not weaker than expected.

About Advance Auto Parts Inc W/I

Advance Auto Parts is one of the industry's largest retailers of aftermarket automotive parts, tools, and accessories to do-it-yourself customers in North America. Advance operated 5,109 stores as of the end of 2018, in addition to servicing 1,231 independently owned Carquest stores. The company's Worldpac unit is a premier distributor of imported original-equipment parts. Advance derived 58% of its 2018 sales from commercial clients, up from 30%-40% before the General Parts deal.

Already a member?

Login to see your Stocks to Watch Trade Ideas.

Not yet a member?

Receive a Morning Action trade idea every market day in the Morning Update, plus Stocks to Watch Trade Ideas every Saturday.

Become A Member