CarParts.com (NASDAQ:PRTS) Issues Quarterly Earnings Results, Beats Expectations By $0.31 EPS

Key Points

• CarParts.com beat quarterly expectations: The company reported an adjusted loss of $0.53 per share versus the $0.84 consensus estimate, while revenue reached $129.3 million, exceeding expectations and growing 1.2% year over year.
• Profitability and operations improved: Adjusted EBITDA was positive for the third consecutive quarter, the GAAP net loss narrowed to $4.1 million, and operating expenses declined 10%. Partnerships, rewards memberships, and next-day delivery initiatives also continued to scale.
• Challenges and valuation concerns remain: Selective consumer spending, elevated freight costs, competitive advertising conditions, and continued GAAP losses weigh on the outlook. Analysts maintain a consensus “Reduce” rating with a $6.00 price target, despite insider buying and a 5.3% share-price gain after the results.

CarParts.com (NASDAQ:PRTS - Get Free Report) posted its earnings results on Thursday. The specialty retailer reported ($0.53) earnings per share for the quarter, beating the consensus estimate of ($0.84) by $0.31, FiscalAI reports. The firm had revenue of $129.33 million during the quarter, compared to the consensus estimate of $124.04 million. CarParts.com had a negative net margin of 5.35% and a negative return on equity of 47.19%.

Here are the key takeaways from CarParts.com's conference call:

• Profitability continued to improve: Q3 adjusted EBITDA was $1.0 million, marking the third consecutive positive quarter, while GAAP net loss narrowed to $4.1 million from $10.9 million a year ago. Operating expenses fell 10% year over year to $47 million.
• Revenue returned to year-over-year growth, increasing 1.2% to $129.3 million, with gross margin rising to 33.4%. Management attributed the improvement to pricing discipline, advertising efficiency, lower freight costs, and a more capital-efficient business mix.
• Capital-light partnerships are scaling: A-Premium exited the quarter at approximately $55 million in annualized revenue, above its $50 million target, while JC Whitney reached roughly $3 million. Management remains focused on longer-term targets of $100 million for A-Premium and $7.5 million for JC Whitney.
• Customer-retention and fulfillment initiatives gained traction. CarParts+ Rewards enrolled more than 200,000 members, fee-income businesses approached a $5 million annualized run rate, and three distribution centers were providing next-day delivery as the company works toward adding Chicago and reaching 300,000 annual last-mile packages.
• Demand and external cost conditions remain challenges: Consumers remain selective with discretionary spending, freight costs are still elevated, and management is limiting advertising in highly competitive segments. The company also continues to report a GAAP loss despite positive adjusted EBITDA.

CarParts.com Stock Up 5.3%

Shares of PRTS stock traded up $0.43 during trading on Thursday, reaching $8.62. The company's stock had a trading volume of 99,785 shares, compared to its average volume of 57,492. CarParts.com has a 1-year low of $3.72 and a 1-year high of $10.98. The stock's 50-day moving average price is $8.11 and its 200 day moving average price is $7.05. The company has a market capitalization of $69.56 million, a price-to-earnings ratio of -1.99 and a beta of 0.68. The company has a debt-to-equity ratio of 0.54, a current ratio of 1.67 and a quick ratio of 0.66.

Insider Buying and Selling

In related news, CEO David Meniane purchased 13,250 shares of CarParts.com stock in a transaction on Thursday, September 10th. The shares were bought at an average price of $10.06 per share, with a total value of $133,295.00. Following the transaction, the chief executive officer directly owned 312,664 shares of the company's stock, valued at approximately $3,145,399.84. This trade represents a 4.43% increase in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed through the SEC website. Also, COO Michael Huffaker acquired 13,250 shares of the firm's stock in a transaction dated Thursday, September 10th. The stock was bought at an average price of $10.06 per share, with a total value of $133,295.00. Following the purchase, the chief operating officer directly owned 152,810 shares in the company, valued at approximately $1,537,268.60. This trade represents a 9.49% increase in their position. The disclosure for this purchase is available in the SEC filing. Over the last quarter, insiders have acquired 219,823 shares of company stock worth $2,000,649. 6.60% of the stock is owned by company insiders.

Wall Street Analyst Weigh In

PRTS has been the subject of several research analyst reports. Weiss Ratings lowered CarParts.com from a "sell (d-)" rating to a "sell (e+)" rating in a research report on Monday, October 12th. Wall Street Zen upgraded CarParts.com to a "hold" rating in a report on Saturday, October 3rd. One analyst has rated the stock with a Hold rating and one has issued a Sell rating to the company. According to MarketBeat.com, CarParts.com presently has an average rating of "Reduce" and a consensus price target of $6.00.

CarParts.com Company Profile

CarParts.com, Inc is an e-commerce retailer specializing in replacement and aftermarket automotive parts and accessories. Through its online platform, the company serves owners, do-it-yourself customers, professional installers and collision-repair businesses seeking parts for cars, trucks and sport utility vehicles.

Its product offerings include collision and body components such as bumpers, fenders, hoods, mirrors and lighting, as well as mechanical parts for braking, suspension, steering, engine, transmission, exhaust and cooling systems.

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