Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of auto-parts retailer Advance Auto Parts
So what: The stock has been on fire in recent months on strong market share gains, but the first-quarter miss -- EPS of $1.79 versus the consensus of $1.81 -- coupled with a weak full-year outlook is forcing Mr. Market to sober up a bit. In fact, Advance Auto's same-store sales increase of 2.1% lagged that of recent results from O'Reilly Automotive and AutoZone, suggesting that the competition is heating up.
Now what: Based on the slow start to the current quarter, management now sees 2012 same-store-sales growth in the low single digits and EPS of $5.55-$5.75, versus Wall Street's view of $5.97. "Our second-quarter sales trends remain challenging despite the positive long-term industry fundamentals," cautioned CEO Darren Jackson. "We remain committed to executing our key priorities while making adjustments to these short term sales trends." Of course, with the stock now sporting a cheapish forward P/E of 10, much of those short-term troubles might already be baked into the price.
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