Advance Auto Parts shares drop amid junk status downgrade and competitor's earnings

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Advance Auto Parts shares drop amid junk status downgrade and competitor's earnings
Credit: © Reuters.

Advance Auto Parts (NYSE: NYSE: AAP ) experienced a substantial 18.7% drop in its share price last month, triggered by a downgrade to junk status from S & P Global Ratings and the potential negative implications from the earnings report of its competitor, AutoZone (NYSE: NYSE: AZO ). This aligns with the InvestingPro Tips that indicate a significant fall in the price over the last month and year, and the stock trading near its 52-week low.

Outgoing CEO Tom Greco recognized the company's sales growth, which according to InvestingPro Data, saw a slight increase of 1.46% in the last twelve months (LTM2023.Q2). However, he attributed this more to market trends than to internal strategies. His successor, Shane O'Kelly, is now tasked with the challenge of amplifying the company's performance. Meanwhile, Interim Chair Gene Lee anticipates swift enhancements in the company's situation.

Advance Auto Parts, with a market cap of 3160M USD and a P/E ratio of 9.22, did not make it to the top ten stock picks of Motley Fool Stock Advisor this Tuesday. The investment research platform's omission could indicate skepticism about the auto parts retailer's near-term prospects. This skepticism might be fueled by the company's significant debt burden and declining trend in earnings per share, as noted in the InvestingPro Tips.

However, it's noteworthy that the company has been aggressively buying back shares and has raised its dividend for three consecutive years, maintaining dividend payments for 18 consecutive years. The company's dividend yield stands at 1.85% (Y2023.D276).

InvestingPro's real-time metrics also show that the company has been profitable over the last twelve months, with an EBITDA of 871.3M (NYSE: MMM ) USD, despite a decline of 15.9% in EBITDA growth (LTM2023.Q2).

For those interested in exploring more about Advance Auto Parts' financial performance and potential investment opportunities, additional insights are available on InvestingPro, which includes 13 relevant tips specifically for AAP.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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