Advance Auto Parts, Inc. (NYSE:AAP) reported fiscal first-quarter revenues and earnings of $3.37 billion and $3.57 per share, respectively, marginally missing Street expectations on both metrics.

Wells Fargo On Advance Auto Parts: Analyst Zachary Fadem maintained an Equal Weight rating for the company, while reducing the price target from $230 to $200.

Although Advance Auto Parts broadly met expectations, the market has become increasingly “punitive,” Fadem said in a note to clients. The company “continues to under-comp peers,” he added.

“Adj. EBIT margins slightly outperformed (+3bps vs. our -10bps), but it took +300bps of non-GAAP adjustments to do so, including 230bps of LIFO and perpetual restructuring costs that still linger since FY14,” the Wells Fargo analyst further wrote.

RBC Capital Markets On Advance Auto Parts: Analyst Steven Shemesh maintained a Sector Perform rating and a price target of $247.
Although comparable store sales grew 0.6% year-on-year, management suggested mid-single-digit growth through the first 10 weeks of the quarter and a decline in the final six weeks, “driven by weakness in DIY – primarily a result of headwinds from lapping stimulus payments YAG as well as a slower start to the spring selling season due to cooler temperatures and higher precipitation,” Shemesh said in a note.

“Importantly, the team noted that these headwinds have subsided in the first 4 weeks of 2Q, with comp sales back within the +1-3% range,” he added.

“Adjusted gross margin increased +231 bps y/y to 47.1%, well ahead of RBCe 45.6%/cons. 45.5% driven by improvement in category management, partially offset by inflationary costs and unfavorable channel/product mix,” the RBC Capital Markets further wrote.

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Raymond James On Advance Auto Parts: Analyst Bobby Griffin reiterated a Strong Buy rating on the company.

“AAP delivered 1Q22 EPS that was in line with the consensus view driven in large part by better-than-expected gross margin rate performance offset by higher-than-expected SG&A%,” Griffin said in a note. The quarterly results “support our thesis that the company's turnaround efforts are gaining steam and should drive incrementally better results going forward,” he added.

AAP Price Action: Shares of Advance Auto Parts had declined by 1.60% to $180.30 at the time of publication Tuesday, according to Benzinga Pro.

Photo: Courtesy of Mike Mozart on Flickr