Can Strong Earnings Drive Advance Auto Parts (AAP) Stock Higher?

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Auto parts retailer Advance Auto Parts (AAP) reports its Q4 numbers before the market open February 19. The company is expected to report earnings of $1.14 per share on sales of $2.1 billion. During the same period last year the company reported earnings of $0.77 per share and revenue of $2.04 billion.

Technical Analysis

AAP was recently trading at $169.06 down $17.09 from its 12-month high and $66.91 above its 12-month low. InvestorsObserver’s Stock Score Report gives AAP a 80 long-term technical score and a 89 short-term technical score. The stock has recent support above $155 and recent resistance below $180. Of the 18 analysts who cover the stock 12 rate it Strong Buy, 1 rate it Buy, 5 rate it Hold, 0 rate it Sell, and 0 rate it Strong Sell, AAP gets a score of 81 from InvestorsObserver’s Stock Score Report.

Analysts' Thoughts

The auto parts sector has been strong over the last year. AAP has not performed as well as its main competitor, Autozone (AZO), but both stocks have shown strength. AAP did hit some selling pressure in December with the overall market, but the selloff was mild in comparison to the overall market and was very short-lived. Drivers are keeping their cars on the road longer than ever, and older cars will always need parts and service to keep them road-worthy which is what makes the auto parts sector attractive.

Looking ahead, analysts see Advance Auto growing earnings by 20 percent per annum over the next five years, and with a forward P/E of 20.8, the stock should continue to show strength as long as the estimates are hit. The company has posted five straight big positive earnings beats, and revenues have topped estimates the last two quarters. The street expects another earnings beat with a whisper number of $1.17 for the quarter. Analysts have an average price target of $198.58 on the stock.

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.

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