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Advance Auto Parts Stock Accelerated on 3Q17 Earnings Beat

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Advance Auto Parts’ 3Q17 earnings

Advance Auto Parts (AAP), one of the largest US auto part retailers, released its fiscal 3Q17 earnings on November 14, 2017. The company’s fiscal 3Q17 earnings cover the 12 weeks ended October 7.

AAP’s fiscal 3Q17 adjusted EPS (earnings per share) stood at $1.43. This was ~17.3% lower than its EPS of $1.73 in fiscal 3Q16.

However, Advance Auto Parts’ earnings stood much higher than analysts’ estimates of $1.23 per share. Now, let’s take a quick look at the market’s reaction to the company’s fiscal 3Q17 report.

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Stock rose more than 16%

On the day of Advance Auto Parts’ (AAP) fiscal 3Q17 earnings release, its stock rose to end the session at $95.72 with a gain of 16.3%. Despite a year-over-year decline, the company’s higher-than-estimated fiscal 3Q17 earnings could be the primary reason for this optimism on Wall Street.

On November 15, 2017, Advance Auto Parts delivered a return of about -45.8% on a YTD (year-to-date) basis, which is much worse than the S&P 500 (SPY) benchmark’s 14.6% YTD gain.

For the same period, the performance of AAP’s direct peers has also been negative. While AutoZone (AZO) has lost about 22.9% YTD, O’Reilly Automotive (ORLY), another US auto parts retail giant, has fallen ~22.5% in 2017 YTD.

Legacy automakers (IYK) General Motors (GM) and Fiat Chrysler (FCAU) have risen 23.0% and 90.0% YTD, respectively.

Series preview

In this series, we’ll take a closer look at some key factors that drove Advance Auto Parts’ fiscal 3Q17 earnings. We’ll also see how the company has been doing in terms of revenues and profitability. At the end of this series, we’ll take a look at AAP’s valuation multiples.

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