Advance Auto Parts closed Wednesday to the upside on the heels of its better-than-expected earnings report. The auto-parts retailer recorded its seventh straight day of gains, marking its longest winning streak since November 2, 2015.
But can the momentum continue? While some of the industry’s biggest players, including Advance Auto Parts, have warned that the Trump administration’s latest threat of 25% tariffs on $300 billion worth of Chinese imports could translate to higher costs to consumers, Wedbush Securities analyst Seth Basham doesn’t seem too concerned. He told Yahoo Finance that he thinks auto-parts retailers are “best positioned” going into the second half of 2019.
“Best positioned in my universe going into the second half of 2019 would be the auto parts retailers,” said Basham. “We had companies like Advance Auto Parts report today — outstanding results, better than expected. The company is managing its turnaround while at the same time taking advantage of industry trends, which are much less sensitive to the macro economy and housing.”
During its earnings call, Advanced Auto Parts executive vice president and chief financial officer Jeff Shepherd played down the risk of tariffs. However, he did say that the potential for more tariffs could have a greater impact on the company moving forward.
“We’ve taken several steps to mitigate the impact, including sourcing refinements and working collaboratively with our suppliers…. But without a doubt, the 25% of tariff for this round is a meaningful increase passed on to our customers. But the industry historically has been able to pass on these increases.”
Seana Smith is the anchor for The Ticker.