The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Advance Auto Parts (NYSE: AAP) and the rest of the auto parts retailer stocks fared in Q2.
Cars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.
The 5 auto parts retailer stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 0.9%.
In light of this news, share prices of the companies have held steady as they are up 1.6% on average since the latest earnings results.
Weakest Q2: Advance Auto Parts (NYSE: AAP)
Founded in Virginia in 1932, Advance Auto Parts (NYSE: AAP) is an auto parts and accessories retailer that sells everything from carburetors to motor oil to car floor mats.
Advance Auto Parts reported revenues of $2.01 billion, down 7.7% year on year. This print exceeded analysts’ expectations by 1%. Despite the top-line beat, it was still a slower quarter for the company with full-year EPS guidance missing analysts’ expectations significantly and a significant miss of analysts’ EBITDA estimates.
"The Advance team delivered solid second-quarter results, with both sales and operating margin at the upper end of our expectations. I want to thank the team for their dedication and hard work throughout the quarter," said Shane O'Kelly, president and chief executive officer.
Advance Auto Parts delivered the slowest revenue growth and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 9.1% since reporting and currently trades at $56.21.
Read our full report on Advance Auto Parts here, it’s free.
Best Q2: Monro (NASDAQ: MNRO)
Started as a single location in Rochester, New York, Monro (NASDAQ: MNRO) provides common auto services such as brake repairs, tire replacements, and oil changes.
Monro reported revenues of $301 million, up 2.7% year on year, outperforming analysts’ expectations by 1.7%. The business had an exceptional quarter with a beat of analysts’ EPS estimates and an impressive beat of analysts’ EBITDA estimates.
Monro scored the biggest analyst estimates beat among its peers. Although it had a fine quarter compared its peers, the market seems unhappy with the results as the stock is down 5.7% since reporting. It currently trades at $15.40.
Is now the time to buy Monro? Access our full analysis of the earnings results here, it’s free.
AutoZone (NYSE: AZO)
Aiming to be a one-stop shop for the DIY customer, AutoZone (NYSE: AZO) is an auto parts and accessories retailer that sells everything from car batteries to windshield wiper fluid to brake pads.
AutoZone reported revenues of $4.46 billion, up 5.4% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a slower quarter as it posted a miss of analysts’ EBITDA estimates and a slight miss of analysts’ gross margin estimates.
Interestingly, the stock is up 5.5% since the results and currently trades at $4,040.
Read our full analysis of AutoZone’s results here.
O'Reilly (NASDAQ: ORLY)
Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ: ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.
O'Reilly reported revenues of $4.53 billion, up 5.9% year on year. This print met analysts’ expectations. Taking a step back, it was a slower quarter as it produced a miss of analysts’ EBITDA estimates and full-year EPS guidance slightly missing analysts’ expectations.
O'Reilly pulled off the fastest revenue growth and highest full-year guidance raise, but had the weakest performance against analyst estimates among its peers. The stock is up 6.8% since reporting and currently trades at $102.
Read our full, actionable report on O'Reilly here, it’s free.
Genuine Parts (NYSE: GPC)
Largely targeting the professional customer, Genuine Parts (NYSE: GPC) sells auto and industrial parts such as batteries, belts, bearings, and machine fluids.
Genuine Parts reported revenues of $6.16 billion, up 3.4% year on year. This number beat analysts’ expectations by 0.9%. It was a satisfactory quarter as it also put up an impressive beat of analysts’ gross margin estimates.
The stock is up 10.7% since reporting and currently trades at $137.14.
Read our full, actionable report on Genuine Parts here, it’s free.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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