Why Advance Auto Parts (AAP) Stock is Lower Today

NEW YORK (TheStreet) -- Shares of Advance Auto Parts Inc. (AAP) are flat in heavy trading today after the company announced its 2014 first quarter earnings.

Comparable earnings per diluted share were $2.25, an increase of 35.5% versus the first quarter last year for the aftermarket parts provider.

Total sales increased 47.3% to $2.97 billion, as compared with total sales during the first quarter of fiscal 2013 of $2.02 billion.

Analysts polled by Thomson Reuters had expected per share earnings of $2.16 and revenue of $2.98 billion.

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The sales increase was driven by the acquisition of General Parts, solid execution delivering a comparable same store sales increase of 2.4% and the addition of new stores over the past 12 months.

TheStreet Ratings team rates ADVANCE AUTO PARTS INC as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate ADVANCE AUTO PARTS INC (AAP) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, expanding profit margins, reasonable valuation levels and notable return on equity. We feel these strengths outweigh the fact that the company has had sub par growth in net income."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • The revenue growth came in higher than the industry average of 5.3%. Since the same quarter one year prior, revenues slightly increased by 6.0%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Compared to its closing price of one year ago, AAP's share price has jumped by 43.86%, exceeding the performance of the broader market during that same time frame. Regarding the stock's future course, although almost any stock can fall in a broad market decline, AAP should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • ADVANCE AUTO PARTS INC's earnings per share declined by 23.9% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, ADVANCE AUTO PARTS INC increased its bottom line by earning $5.33 versus $5.22 in the prior year. This year, the market expects an improvement in earnings ($7.50 versus $5.33).
  • The gross profit margin for ADVANCE AUTO PARTS INC is rather high; currently it is at 53.20%. Regardless of AAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 3.49% trails the industry average.
  • You can view the full analysis from the report here: AAP Ratings Report

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