Advance Auto Parts reported better-than-expected 3Q results. Adjusted EPS of $2.81 jumped 33.8% year-over-year and surpassed the Street’s estimates of $2.66. The auto part retailer’s revenues of $2.54 billion also exceeded the consensus estimate of $2.48 billion and rose 9.9% year-over-year, led by strong growth in comparable-store sales.

Advance Auto Parts’ (AAP) comparable-store sales advanced 10.2% year-over-year during the reported quarter. The company’s CEO Tom Greco said that the increase in comparable-store sales “is the strongest in 15 years, and was led by our DIY Omnichannel performance. Double digit comp sales combined with disciplined cost control resulted in 183 basis points of adjusted operating income margin expansion and a 95% increase in quarterly free cash flow.”

Despite reporting robust top and bottom-line results for 3Q, Advance Auto refrained from reinstating or updating full-year 2020 guidance due to the uncertainty and continued volatility amid the COVID-19 pandemic. The company withdrew its full-year guidance on April 9. (See AAP stock analysis on TipRanks).

Following the earnings release, Wells Fargo analyst Zachary Fadem reiterated a Hold rating on the stock with a price target of $165 (6.2% upside potential). In a note to investors, Fadem wrote, “We believe AAP is taking the difficult, but necessary steps to turn around a business that has been long mismanaged from hyper-growth (including unintegrated M&A) and underinvestment. In our view, considerable investment remains and we see execution risk and limited valuation upside should results turn spotty.”

Currently, the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 10 Buys, 3 Holds and 2 Sells. The average price target of $175.75 implies upside potential of about 13.1% to current levels. Shares are down by nearly 3% year-to-date.

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