To borrow a principle from Benjamin Graham and Warren Buffett, price is what you pay, but value is what you actually get. I certainly wouldn't be the first commentator to call Advance Auto Parts (AAP -2.54%) stock a value trap, but even after a precipitous share price drop, it's difficult to find value in this automotive parts retailer.

Sure, Advance Auto Parts stock bounced 4.4% the day before the company released its third-quarter 2023 earnings results. However, many beaten-down stocks caught a bid that day due to a better-than-expected inflation report. When Advance Auto Parts released its quarterly report the next day, the stock tanked and it's not difficult to see why investors were in a bad mood.

Another quarter, another guidance cut

To understand the present, investors should examine the past. In the case of Advance Auto Parts, examining previous quarterly earnings reports will reveal an unfortunate pattern of guidance cuts.

In this year's first quarter, Advance Auto Parts stunned investors by nearly halving its full-year 2023 EPS outlook range from a range of $10.20-$11.20 down to just $6.00-$6.50. Less drastically but nonetheless painfully, Advance Auto Parts also reduced its 2023 sales guidance from between $11.4 billion and $11.6 billion to a range of $11.2 billion to $11.3 billion.

Fast-forward to Advance Auto Parts' second-quarter report, and the company disappointed investors with another earnings guidance reduction. Specifically, Advance Auto Parts lowered its 2023 earnings per share (EPS) outlook to a range of $4.50 to $5.10. However, at least the company nudged its full-year sales guidance up to a range of $11.25 billion to $11.35 billion.

Could it get any worse from there? Never underestimate Advance Auto Parts' ability to let its investors down. The company's third-quarter update disclosed a newly slashed 2023 EPS guidance range of $1.40 to $1.80 (from $10.20 to $11.20 less than a year ago, mind you) as well as a slightly lowered full-year sales guidance of $11.25 billion to $11.3 billion.

With each fresh, deep EPS outlook cut, one can only wonder whether any credibility should be assigned to Advance Auto Parts' current full-year guidance. Even if investors are willing to give credence to the company's forecasts, it will be difficult to overlook Advance Auto Parts' unfortunate shift from many consecutive quarters of profitability to a sudden $48.6 million net loss in Q3 2023.

An underwhelming "strategic review" update

In September, Shane O'Kelly replaced Tom Greco as CEO of Advance Auto Parts, and some investors may have hoped that this event would mark a turning point for the company. After all, O'Kelly had former executive experience at a Home Depot subsidiary and promised an "operational and strategic review of the business" for Advance Auto Parts.

From then until mid-November, Advance Auto Parts provided no updates on the progress of this strategic review. Week after week, investors hungered for any indication that O'Kelly would turn the company around and somehow make it more competitive against rivals like AutoZone and O'Reilly Automotive. As time passed and Advance Auto Parts' third-quarter earnings report date approached, it became increasingly evident that O'Kelly needed to deliver a grand slam of a strategic review.

As it turned out, O'Kelly's update consisted of two parts. First, Advance Auto Parts is launching a cost-cutting program that's expected to save $150 million per year. However, it's really $100 million of cost savings since the company will "reinvest up to $50 million of these savings in our team members with a clear focus on improving the retention of our frontline team members."

Second, Advance Auto Parts will focus on its "blended box business model," which means selling its wholesale automotive-parts distributor Worldpac as well as the company's Canadian business. Thus, Advance Auto Parts' "strategic review," so far, basically consists of cost-cutting.

If this is only the beginning of a more comprehensive company overhaul, then perhaps Advance Auto Parts might actually be on the cusp of a turnaround. For now, however -- especially in the wake of another credibility-straining guidance cut -- prudent investors should demand more from Advance Auto Parts. The company must show, not just tell, that it can regain market share amid fierce competition. Therefore, Advance Auto Parts stock is a sell and remains a potential trap that still needs to demonstrate its value.