Why These Auto Parts Stocks Are Seeing a Rising Tide

By Chris Lange Updated Jan 11, 11:19PM EST · Published May 22, 8:40AM EDT

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Why These Auto Parts Stocks Are Seeing a Rising Tide — © Thinkstock

Advance Auto Parts Inc. (NYSE: AAP) and AutoZone Inc. (NYSE: AZO) each saw shares make a handy gain early on Tuesday. These companies have reported their most recent quarterly results, and while each had somewhat mixed reports, the overall outcome was good enough to give the shares a nice bump.

When Advance Auto Parts released its first-quarter financial results before the markets opened on Tuesday, the company said that it had $2.10 in earnings per share (EPS) on $2.87 billion in revenue. That compared with consensus estimates from Thomson Reuters of $1.97 in EPS on revenue of $2.91 billion. The same period of last year reportedly had EPS of $1.60 and $2.89 billion in revenue.

Total net sales for the first quarter decreased 0.6% from the prior-year period, and comparable store sales decreased 0.8% as well.

As a result of the recently signed Tax Cut and Jobs Act, which lowered the federal tax rate, the company’s effective tax rate in the first quarter was 24.5%, compared to 35.0% in the prior-year first quarter.

[nativounit]

Shares of Advance Auto Parts closed trading at $119.15 Monday, with a consensus analyst price target of $119.72 and a 52-week trading range of $78.81 to $143.83. Following the announcement, the stock was up about 2.5% at $122.20 in early trading indications Tuesday.

AutoZone also shared its fiscal third-quarter earnings report before the markets opened on Tuesday. The auto parts retailer posted $13.42 in EPS on $2.66 billion in revenue, while consensus forecast had called for $13.01 in EPS on revenue of $2.72 billion. In the same period of last year, the company said it had EPS of $11.44 and $2.62 billion in revenue.

During the quarter, domestic same same-store increased 0.6%, while total sales increased by 1.6%. Also in this time, AutoZone opened 26 new stores and relocated two stores in the United States, and it opened four new stores in Mexico.

Bill Rhodes, board chair, president and CEO, commented on the report:

Our ongoing initiatives, which include enhanced inventory availability, further commercial acceleration and new omni-channel selling initiatives, continue to gain traction as we roll them further across our chain. As we continue to invest in our business, we remain committed to our disciplined approach of increasing operating earnings and cash flow, and utilizing our balance sheet and capital effectively.

Shares of AutoZone closed Monday at $665.09. The consensus price target is $777.00, and the 52-week range is $491.13 to $797.89. Following the announcement, the stock was up 2.4% at $681.00 in early trading indications Tuesday.

[recirclink id=461826]

[wallst_email_signup]

About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.