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Investors thrilled with first-quarter results
(Roanoke Times, The (Roanoke, VA) (KRT) Via Acquire Media NewsEdge) May 31--In the two weeks since Advance Auto Parts announced its first financial results under Darren Jackson's leadership, excitement about the company's turnaround has stretched from Roanoke to Wall Street.
Shares of the region's only Fortune 500 company have jumped nearly 17 percent since May 15. The stock is being traded at more than twice its average daily 2008 volume prior to the earnings announcement.
What's all the fuss about?
Advance's first-quarter earnings of 86 cents per share beat the consensus of analysts by 8 cents.
The day after the earnings were announced, investors bought more than 6 million shares of the company's stock, driving up the price $4.18 to $38.82. Shares of Advance closed the month on Friday at $40.30.
"When you look at the recent performance, the investor community is seeing the opportunities we have in front of us," said Judd Nystrom, vice president of finance and investor relations at Advance. "Seeing the progress we've made is very exciting for investors."
Jackson, who took over in November as chief executive at Advance after serving three years on its board, is leading a multitiered strategy to help the company regain its footing.
After seeing income decline in 2006, Advance boosted income by a mere 3 percent in 2007 -- a year that also saw Advance lay off employees and slow store openings.
Analysts reacted to the positive first-quarter results by raising their 2008 earnings estimates and target stock price for the company.
Matthew Fassler of Goldman Sachs recently boosted his price target for Advance to $45 per share from $40.
"This forecast is conservative based on first-quarter trends, and on the typical relationship of first-quarter results to full year results," Fassler wrote in a note to investors.
Some company executives also took part in the buying frenzy.
Jackson bought nearly 50,000 shares of the stock on May 22 -- at a price of nearly $1.9 million, according to U.S. Securities and Exchange Commission filings.
Kevin Freeland, the company's executive vice president for supply chain and information technology, bought nearly 55,000 shares for about $2.1 million the next day.
Nystrom said investors pay close attention when key company leaders invest their money in company stock.
Not everyone is buying.
Jimmie Wade, executive vice president of customer development, took the rising stock price as a chance to exercise options on 65,000 shares and sell them for a gain of more than $1.4 million on May 20.
Nystrom said Wade, who has been with the company for 15 years, needed to exercise his shares before they expire and that it's smart for him to diversify his holdings.
The fact that Wade maintains nearly 47,000 shares of the company's stock, Nystrom said, shows faith in future performance.
The Associated Press contributed to this report.
To see more of The Roanoke Times, or to subscribe to the newspaper, go to http://www.roanoke.com.
Copyright (c) 2008, The Roanoke Times, Va.
Distributed by McClatchy-Tribune Information Services.
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