3 Advance Auto Parts Analysts Break Down Q1 Earnings

Advance Auto Parts (NYSE: AAP) posted a first-quarter beat-and-raise Wednesday.

The auto parts retailer reported first-quarter adjusted earnings of $3.34 per share against a $3.08 Street estimate and sales of $3.33 billion, outrunning a $3.28-billion estimate. 

The company raised its 2021 sales guidance from a range of $10.2 billion-$10.4 billion to a range of $10.4 billion to $10.6 billion. The Street was expecting a figure of $10.3 billion. 

Here's how three Advance Auto Parts reacted to the quarterly print. 

Oppenheimer On Advance Auto Parts 

The auto parts retail industry is “structurally sound” and positioned to perform well as the headwinds of the COVID-19 pandemic subside, analyst Brian Nagel said in a note. 

The company showed a 1% increase in gross margins and steady sales growth into the second quarter, the analyst said. 

Despite these positive numbers, he said the need for a “lengthy integration process” and Advance Auto Parts' “ongoing supply chain inefficiencies” represent a company specific shortcoming that is not present industrywide.

Nagel said he ultimately sees better industry plays with AutoZone, Inc. (NYSE: AZO) and O’Reilly Automotive Inc (NASDAQ: ORLY). 

Oppenheimer maintained a Perform rating on Advance Auto Parts. 

Tigress Financial Partners On Advance Auto Parts 

Tigress continues to recommend Advance Auto Parts as a buy and sees further upside in the stock, analyst Ivan Feinseth said in a newsletter.

The company continues to benefit from secular auto trends including a “surge in new and used car sales and an expected ramp-up in miles driven as people return to work and travel,” the analyst said. 

Credit Suisse On Advance Auto Parts 

Advance Auto Parts has the potential for significant margin expansion stemming from multiple initiatives outlined at the company's April analyst day, according to Credit Suisse. 

If these cost-cutting initiatives remain on track, Advance Auto Parts could grow its EBIT by more than 10% annually based on the low end of its 2023 guidance; the low end of the revised 2021 guidance; and sales growth in the low single digits, according to the sell-side firm. 

Credit Suisse maintained an Outperform rating on Advance Auto Parts with a $215 price target. 

AAP Price Action: Advance Auto Parts shares were trading 0.26% lower at $190.65 at last check Friday. 

Photo by Mike Mozart via Wikimedia.