Several new twists have emerged recently in the year-long buyout dance between CSK Auto
What does this have to do with Advance Auto Parts
On top of this buyout speculation, Advance Auto Parts will report fourth-quarter earnings tomorrow. I expect to see a relatively wild ride this week for the stocks of auto parts retailers.
What Fools say:
Here's how Advance Auto Parts fares against its primary competitors in Motley Fool CAPS, our investor-intelligence database:
Market Cap (millions) |
Trailing P/E Ratio |
CAPS Rating (out of 5) |
|
---|---|---|---|
Advance Auto Parts |
$3,500 |
15.5 |
*** |
AutoZone |
$7,460 |
13.3 |
*** |
O'Reilly Automotive |
$3,420 |
17.7 |
***** |
CSK Auto |
$426 |
N/A |
* |
While CAPS players rate the stock to outperform by a margin of 91 to 9, I don't sense much enthusiasm in the commentaries. Most of the bulls base their case on an economic downturn causing more consumers to save money by doing their own auto repair, which would favor auto parts suppliers.
While that may be true (and I don't know if there are real statistics to support it), I'm not hearing many arguments that Advance Auto Parts is particularly well-placed (compared with its competitors) to benefit from this trend.
What analysts say:
Wall Street analysts expect a 15% earnings pop to $0.38 per share for the quarter, splitting the difference on management's recent guidance of $0.36 to $0.40. Longer-term, consensus analyst estimates call for 13% earnings growth this fiscal year on a 7% sales increase.
One Fool says:
I'm less excited by the company's prospects. For the first nine months of the year, Advance Auto Parts was hardly hitting on all cylinders. Comparable-store sales growth was sluggish at 1.2% compared with 2.3% last year, and earnings per share advanced only 5.5%.
There have been several changes in top management over the past few months. In November, the company tapped Best Buy
Change can be good for a company that's experiencing sluggish results, and perhaps a combination with CSK Auto is just what Advance Auto Parts needs to jump-start growth. But too much change all at the same time can also create confusion and lack of focus. I'd like to see some more horsepower from Advance Auto Parts before jumping on the stock.
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