Advance Auto Components Beats This fall Expectations; Shares Up

Advance Auto Components, Inc. (AAP) delivered strong outcomes for the quarter ending January 1, 2022, and ended the fiscal yr on a constructive notice. The outcomes beat each earnings and gross sales estimates, and the corporate even issued upbeat steering for FY22.

Following the information, shares jumped greater than 2% in the course of the prolonged buying and selling session. Advance Auto Components is a number one automotive aftermarket elements supplier. With a market cap of $13.9 billion, its shares have gained 37.8% over the previous yr.

Strong Outcomes

The corporate reported This fall adjusted earnings of $2.07 per share, 15 cents greater than analyst estimates of $1.92 per share. The determine was 35.4% greater in comparison with the prior yr’s variety of $1.76 per share.

AAP’s quarterly internet gross sales got here in at $2.4 billion, registering a modest 1.3% progress in comparison with the year-ago interval. The quantity beat the analyst estimates of $2.34 billion. This was aided by comparable same-store gross sales progress of 8.2%.

For the complete yr fiscal 2021, the corporate’s internet gross sales leaped 8.8% to $11 billion pushed by comparable retailer gross sales progress of 10.7%. Furthermore, FY21 adjusted earnings jumped 43.8% to $12.02 per share in comparison with FY20.

The corporate’s FY21 working money movement got here in at $1.1 billion, rising 14.7% yearly, and free money movement superior 17.2% to $822.6 million.

Shareholder Rewards

In February, the corporate’s Board of Administrators elevated its current share buyback authorization by $1 billion and even raised its quarterly money widespread dividend by 50% to $1.50 per share. The dividend shall be payable on April 1, to shareholders of document on March 18.

President and CEO Feedback

Pleased with the outcomes, the corporate’s President and CEO, Tom Greco, stated, “As we start 2022, we stay targeted on the disciplined execution of our strategic plan. Whereas we’re nonetheless navigating unsure instances because it pertains to macroeconomic elements, together with important inflation, the investments we’ve made in differentiating our enterprise will proceed to offer aggressive benefit for Advance.”

“We consider these investments, together with trade tailwinds, corresponding to enchancment in miles pushed and an getting old fleet will allow us to proceed to drive worthwhile progress and complete shareholder return,” Greco added.

Upbeat FY22 Steerage

Primarily based on the present enterprise momentum, and comparative gross sales progress above the top-end of the full-year steering, the corporate gave an optimistic outlook for full-year fiscal 2022.

For FY22, Advance Auto Components expects to attain internet gross sales within the vary of $11.2 to $11.5 billion, modestly greater than the consensus estimates of $11.17 billion. FY22 comparable retailer gross sales are anticipated to develop between 1% to three%.

Equally, adjusted earnings are projected to be between $13.20 and $13.75 per share, whereas the consensus estimate is pegged at $13.27 per share.

Analysts’ View

Responding to AAP’s monetary efficiency, Wells Fargo analyst Zachary Fadem lowered the worth goal on the inventory to $245 (9.2% upside potential) from $255 and maintained a Maintain ranking.

Fadem stated, “We consider AAP continues to take the troublesome however needed steps to show round a enterprise that we consider has lengthy been mismanaged from hyper-growth (through M&A) and underinvestment. Whereas the corporate has skilled COVID-driven tailwinds, we consider that appreciable funding stays and that valuation upside in 2022/23 might show restricted absent top-line outperformance and important margin enchancment,”

Total, the inventory has a Average Purchase consensus ranking based mostly on 11 Buys and 5 Holds. The typical Advance Auto Components value goal of $264.88 implies 18.1% upside potential to present ranges.

Inventory Traders

TipRanks’ Inventory Traders software exhibits that investor sentiment is presently Very Optimistic on Advance Auto Components, with 22.7% of portfolios tracked by TipRanks growing their publicity to AAP inventory over the previous 30 days.

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