Advance Auto Parts Inc Reports Results For The Quarter - Earnings Summary

The action in Advance Auto Parts, Inc. has some investors and traders confused. The company released its earnings report Thursday and it was well short of estimates.

But the shares are trading higher. This is why it is our Stock of the Day.

The company reported a loss of four cents per share. This was well below the Street's estimates of a profit of 49 cents. The revenue was also well short of estimates. It came in at $2.15 billion. Analysts were looking for $2.65 billion.

But sometimes the headlines don't tell the whole story.

Operating margin is an important metric studied by analysts. It is a measurement of how profitable a company is.

For example, if a company has an operating margin of 5%, after all costs and expenses, it makes five cents for every dollar of sales. If the margin is 7%, it makes seven cents on every dollar of sales, and so on.

If the operating margin is increasing, it means the company is becoming more efficient and profitable.

Advance Auto's management team predicts an operating margin of 2%-3% in 2025. But their guidance for 2027 is 7%. So, despite current losses, some investors are buying shares because they believe the company will turn things around and that the long-term picture is bullish.

Read Also: Hillenbrand Posts Better-Than-Expected Earnings, Joins Beazer Homes, Tapestry, Walt Disney And Other Big Stocks Moving Higher On Thursday