Advance Auto Parts Continues to Surge after Solid Q2 Results


Nov. 20 2020, Updated 5:19 p.m. ET

Advance Auto Parts stock

Last week, which ended August 7, Advance Auto Parts (AAP) stock rose 9.1% to $159.72. The price rally was primarily driven by investor optimism about the company’s near-term growth after it released strong second-quarter results. Last week, the stocks of auto parts retailers (XLY) AutoZone (AZO) and O’Reilly Automotive (ORLY) rose 3.6% and 3.5%, respectively. By comparison, US automakers General Motors (GM) and Ford (F) fell 0.6% and 2%, respectively, last week.

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Solid Q2 2018 earnings report

Last week, AAP reported a 24.7% YoY (year-over-year) increase in its adjusted earnings to $1.97 per share for the second quarter. It beat Wall Street analysts’ estimate of $1.86. During the quarter, its revenue rose 2.8% YoY to $2.33 billion, while its same-store sales rose 2.8%.

Advance Auto Parts’ operating profit was $168 million with an operating profit margin of 7.2% in the second quarter. Its operating profit margin was significantly better than 6.5% reported in the second quarter of 2017. According to analysts’ consensus estimate, the positive trend in Advance Auto Parts’ earnings will likely continue in the second half of 2018.

Read AAP’s Q2 2018 Earnings: Stronger Sales and Profits to learn about Advance Auto Parts’ latest quarterly results.

Technical outlook

On August 17, Ferrari stock settled at $159.72. An immediate horizontal resistance level in the stock is $169, and a violation of this level could attract fresh buying in the stock.

AAP was trading well above its 50-day simple moving average of $140.96, suggesting a bullish bias in price action. On the downside, no major horizontal support level in the stock is above $139.40.

Be sure to visit Market Realist’s Automobiles page for news and updates on the auto industry.


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