Advance Auto Parts beats Q2 profit estimates on cost cuts, lowers FY profit forecast

Overview

• Advance Auto Parts Q2 sales of $2.01 bln, just ahead of analyst expectations, per LSEG data

• Adjusted EPS of $0.69 for Q2 beats analyst estimates, per LSEG data

• Co completed $1.95 bln senior notes offering, entered new $1.0 bln credit facility

Outlook

• Advance Auto Parts reaffirms full-year 2025 sales guidance of $8.4 bln to $8.6 bln

• Company revises full-year adjusted EPS to $1.20-$2.20 due to higher interest expense

• Advance Auto Parts expects 2025 comparable store sales growth of 0.5% to 1.5%

• Company plans to open 30 new stores and 10 market hubs in 2025

Result Drivers

• PRO BUSINESS GROWTH - Co attributes comparable sales increase to growth in Pro business, per CEO Shane O’Kelly

• FOOTPRINT OPTIMIZATION - Margin expansion driven by savings from footprint optimization activity completed in March

• STORE REDUCTION - Reduced SG&A expenses due to operating fewer stores compared to last year

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 1 "strong buy" or "buy", 24 "hold" and 4 "sell" or "strong sell"

• The average consensus recommendation for the auto vehicles, parts & service retailers peer group is "buy."

• Wall Street's median 12-month price target for Advance Auto Parts Inc is $50.00, about 23.6% below its August 13 closing price of $61.81

• The stock recently traded at 24 times the next 12-month earnings vs. a P/E of 16 three months ago

Press Release: ID:nBw1WNNbDa