RALEIGH, N.C. - Advance Auto Parts , Inc. (NYSE: NYSE:AAP) reported a slight miss on its first-quarter earnings per share (EPS) but provided strong guidance for the full year, sending shares up 6% in response.
The automotive aftermarket parts provider announced a first-quarter EPS of $0.67, falling short of the analyst estimate of $0.71. Revenue for the quarter was also slightly below expectations at $3.41 billion compared to the consensus estimate of $3.43 billion.
Despite the miss, the company's future outlook appears robust, with full-year 2024 EPS guidance ranging from $3.75 to $4.25, comfortably encompassing the consensus estimate of $3.82. Revenue guidance for the same period is projected to be between $11.3 billion and $11.5 billion, straddling the analyst consensus of $11.35 billion.
The midpoint of the EPS guidance range, at $4.00, is above the consensus, indicating management's confidence in the company's direction.
Shane O’Kelly, president and CEO, attributed the quarter's performance to decisive actions such as supply chain consolidation and progress towards the potential sale of Worldpac.
He noted that while the industry had a slower start to 2024, the company's cost reduction efforts, including a year-over-year selling, general and administrative (SG&A) expense reduction, are expected to streamline operations. O'Kelly emphasized the company's commitment to improving core fundamentals and delivering shareholder value.
The company's net sales saw a marginal decline of 0.3% compared to the same quarter last year, with comparable store sales decreasing by 0.2%. Gross profit margin decreased by 82 basis points to 42.0%, mainly due to increased costs that pricing actions did not fully offset. However, SG&A expenses improved to 39.4% of net sales, down from 39.9% in the first quarter of 2023, reflecting the company's cost control efforts.
Investors reacted positively to the strong guidance, with the stock experiencing a significant 6% increase. This optimistic market movement suggests confidence in the company's future performance despite the current quarter's earnings miss.
As part of its capital allocation strategy, Advance Auto Parts declared a regular cash dividend of $0.25 per share, payable on July 26, 2024, to shareholders of record as of July 12, 2024. This decision reflects the company's ongoing commitment to returning value to its shareholders.
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