Strong Q2, guidance raised
AAP reported a strong +2.8% comp (AE/consensus 0.0%/+0.1%), representing the best performance since Q416. This helped adj. operating margins expand ~19bps YoY (10bps ahead of consensus), with adj. EPS $0.11 above expectations, growing 24.7% YoY. Encouragingly, AAP expects the strengthening sales environment to continue, resulting in FY18 comp guidance being raised to 0.0% to +1.5% (vs. AE/consensus +0.4%/+0.1%). FY18 operating margins guidance is increased ~20bps at the low-end, while AAP now expects to generate >$500m of FCF (prior >$400m). Consequently, AAP plans to repurchase $100m to $200m of shares in H218, as part of a new $600m programme. Encouraging signs of improvement across most metrics.Advance Auto Parts is an automotive aftermarket parts provider in North America, serving both professional installers (Professional), and do-it-yourself (DIY), customers as well as independently owned operators. The company's stores and branches provide a range selection of brand name, original equipment manufacturer and private label automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy duty trucks. Through its integrated operating approach, the company serves its Professional and DIY customers through a variety of channels ranging from brick and mortar store locations to self-service e-commerce sites.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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