Is More Trouble Ahead for Advance Auto Parts?
It is always a troubling sign when a company cuts its dividend. Sometimes there's a good reason for a dividend cut (like a spin off), other times it is simply an indication of business difficulties that are expected to linger for longer. The second situation is what appears to be the case at Advance Auto Parts (NYSE: AAP) right now.
Here's a quick examination of the events taking shape and how investors should be thinking about the stock today.
In the company's fiscal first quarter, Advance Auto Parts declared a dividend of $1.50 per share. In the fiscal second quarter that dividend was dropped to $0.25, which is slightly more than 80% lower. As far as dividend cuts go, that was a pretty big reduction. Perhaps not surprisingly, it came along with a weak earnings release.
Source Fool.com
