Taking a Closer Look at Advanced Auto Parts Before Earnings

Advance Auto Parts, Inc. (NYSE:AAP) is an automotive aftermarket parts provider that serves both professional installers and do-it-yourself customers. The company operates over 4,800 stores and 170 Worldpac branches in the United States, Canada, Puerto Rico and the U.S. Virgin Islands. Advance Auto Parts also serves more than 1,200 independently owned Carquest branded stores across Mexico, Grand Cayman, the Bahamas, Turks and Caicos and British Virgin Islands.

AAP stock price has increased about 66% over the past 12 months, and just yesterday hit a multi-year high of $198 -- a far advance from its April 2020 bottom of $112.41. Additionally, shares of Advance Auto Parts stock have grown more than 22% year-to-date and sport a dividend yield of 0.52%.

Advance Auto Parts is set to release its next quarterly financial results on May 17. So far, AAP has outperformed earnings expectations on two of its last four earnings reports. For the first quarter of 2020, Advance Auto Parts missed analyst estimates by a margin of $0.82 and reported an earnings per share (EPS) of $0.91. For the second quarter of 2020, AAP increased its EPS massively to $2.92 and outperformed expectations by a margin of $0.94. For the third quarter of 2020, Advance Auto Parts posted a decrease in earnings, dropping to $2.81 per share and beat estimates by a margin of $0.15. In the most recent quarterly report, Advance Auto Parts reported an EPS of $1.87 and beat expectations by a margin of $0.10.

From a fundamental perspective, Advance Auto Parts is a slow and steady growing company.  Advance Auto Parts stock is likely best suited for long-term investors who are comfortable with modest gains. The positive news for investors is that AAP has a forward price-earnings ratio of 19.72, which is a huge improvement from its current value.

Regardless, heading into today, analysts were leaning bullish on the security. Specifically, 10 of the 15 in coverage sport a "buy" or "strong buy" recommendation, while the remaining five carry a tepid "hold or worse.