A bus drives past an Advance Auto Parts Inc. store in Phoenix, Arizona
Caitlin O'Hara/BloombergAdvance Auto Parts stock is falling even though the auto parts retailer reported better-than-expected third-quarter earnings.
Advance Auto Parts (ticker: AAP) said it earned $147.5 million, or $2.13 a share. On an adjusted basis, earnings were $2.81 a share, while revenue rose 9.9% to $2.54 billion. Analysts were looking for EPS of $2.70 and revenue of $2.48 billion.
Same-store sales climbed 10.2%, ahead of the 7.2% analyst estimate, and the strongest rate in 15 years, the company said.
That said, Advance Auto was down 3.8% in early trading, to $150.74.
The quarter was a strong one, coming in ahead of expectations, and the company called out growth in its do-it-yourself omnichannel platform, as more people order parts online to tackle repairs.
Investors might be concerned by the fact that Advance Auto hasn’t reinstated its full-year financial forecasts, which it withdrew in April, citing the impact of Covid-19. They may also be thinking of the additional $9 million in costs that the company has faced related to the pandemic, although other retailers with strong showings haven’t been punished for coronavirus-based costs.
It could also be lingering concerns about what a vaccine would mean for the company. Advance Auto shares didn’t participate in Monday’s rally, closing just a few cents above where it did at the end of last week. That could indicate that investors are concerned that a reopened economy wouldn’t bode well for its business.
Still analysts have been upbeat about the stock in recent months. AutoZone (AZO), a rival, fell despite reporting strong third-quarter results in September.
Write to Teresa Rivas at teresa.rivas@barrons.com
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November 10, 2020 at 09:17PM
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Advance Auto Parts Stock Is Dropping After Strong Earnings - Barron's
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