Advance Auto Parts (NYSE:AAP) Issues Earnings Results

Advance Auto Parts (NYSE:AAP) released its earnings results on Friday. The company reported $0.86 earnings per share for the quarter, beating analysts’ consensus estimates of $0.41 by $0.45, FiscalAI reports. Advance Auto Parts had a positive return on equity of 0.64% and a negative net margin of 4.37%.The firm had revenue of $1.97 billion during the quarter, compared to the consensus estimate of $1.95 billion. During the same period in the prior year, the company posted ($10.16) EPS. The company’s revenue was down 1.2% compared to the same quarter last year. Advance Auto Parts updated its FY 2026 guidance to 2.400-3.10 EPS.

Here are the key takeaways from Advance Auto Parts’ conference call:

• Advance returned to positive comparable sales in 2025 and materially improved profitability — full‑year comps were roughly +1%, adjusted operating income margin rose to 2.5% and Q4 adjusted operating margin was 3.7%, driving adjusted EPS of $2.26 for the year.
• Management guided 2026 to an acceleration in comps to 1%–2%, adjusted operating income margin of 3.8%–4.5%, a ~45% gross margin rate and a targeted $100M in free cash flow while increasing 2026 CapEx to $300M.
• Operational changes are well underway — the company cut its store footprint (≈500 corporate + 200 independent closures), consolidated U.S. DCs from ~38 to 16 (15 planned by year‑end), added ~100k SKUs, improved in‑store availability to the high‑90s and accelerated Pro delivery times, plus launched the Argos owned oil brand and new loyalty program.
• Near‑term cash performance remains a headwind: 2025 free cash flow was ‑$298M (including ~$140M of store‑optimization cash), the company reduced supplier financing from $2.7B to $2.5B, and timing/working‑capital items pressured year‑end cash.
• Key risks include ongoing DIY demand softness and execution risk as supply‑chain and store productivity initiatives are still early stage (management trimmed the pace to 7% operating margin timing), plus a planned ~50 bp LIFO headwind in 2026.

Advance Auto Parts Stock Up 1.1%

Shares of AAP opened at $58.88 on Friday. The stock’s 50-day moving average price is $45.86 and its two-hundred day moving average price is $52.34. Advance Auto Parts has a 12 month low of $28.89 and a 12 month high of $70.00. The company has a market capitalization of $3.53 billion, a PE ratio of 80.66 and a beta of 1.14. The company has a current ratio of 1.73, a quick ratio of 0.88 and a debt-to-equity ratio of 1.55.

Advance Auto Parts Announces Dividend

The business also recently announced a quarterly dividend, which will be paid on Friday, April 24th. Investors of record on Friday, April 10th will be given a dividend of $0.25 per share. This represents a $1.00 annualized dividend and a yield of 1.7%. The ex-dividend date of this dividend is Friday, April 10th. Advance Auto Parts’s dividend payout ratio (DPR) is currently -15.90%.

Analyst Ratings Changes

A number of research analysts recently issued reports on the stock. TD Cowen decreased their price objective on shares of Advance Auto Parts from $62.00 to $46.00 and set a “hold” rating on the stock in a research note on Tuesday, January 20th. JPMorgan Chase & Co. raised their target price on Advance Auto Parts from $44.00 to $62.00 and gave the company a “neutral” rating in a report on Friday, October 31st. Evercore lowered their price target on Advance Auto Parts from $58.00 to $56.00 and set an “in-line” rating for the company in a report on Tuesday, December 16th. Truist Financial set a $48.00 target price on Advance Auto Parts in a research note on Wednesday, December 17th. Finally, Morgan Stanley dropped their target price on shares of Advance Auto Parts from $55.00 to $45.00 and set an “equal weight” rating for the company in a report on Thursday, January 15th. Three analysts have rated the stock with a Buy rating, seventeen have assigned a Hold rating and three have assigned a Sell rating to the company’s stock. According to data from MarketBeat.com, the company has a consensus rating of “Hold” and a consensus price target of $51.41.

Institutional Trading of Advance Auto Parts

Institutional investors and hedge funds have recently added to or reduced their stakes in the company. Hsbc Holdings PLC lifted its holdings in Advance Auto Parts by 3.1% in the second quarter. Hsbc Holdings PLC now owns 6,306 shares of the company’s stock valued at $293,000 after buying an additional 191 shares during the period. LPL Financial LLC boosted its position in shares of Advance Auto Parts by 2.0% during the 4th quarter. LPL Financial LLC now owns 19,410 shares of the company’s stock valued at $763,000 after purchasing an additional 380 shares in the last quarter. Caitong International Asset Management Co. Ltd acquired a new stake in Advance Auto Parts during the third quarter worth approximately $31,000. CANADA LIFE ASSURANCE Co grew its stake in Advance Auto Parts by 1.0% during the fourth quarter. CANADA LIFE ASSURANCE Co now owns 53,936 shares of the company’s stock worth $2,119,000 after purchasing an additional 527 shares during the period. Finally, California State Teachers Retirement System increased its holdings in Advance Auto Parts by 1.1% in the second quarter. California State Teachers Retirement System now owns 55,187 shares of the company’s stock worth $2,566,000 after purchasing an additional 604 shares in the last quarter. Institutional investors and hedge funds own 88.70% of the company’s stock.

Key Stories Impacting Advance Auto Parts

Here are the key news stories impacting Advance Auto Parts this week:

• Positive Sentiment: Q4 beat on EPS and revenue — Advance reported $0.86 EPS vs. $0.41 expected and $1.973B in sales vs. ~$1.95B consensus, marking a swing to profitability vs. prior year losses. BusinessWire: Q4 results & guidance
• Positive Sentiment: Margins and turnaround signs — Management highlighted margin recovery and narrowing losses; several writeups note improving profitability and execution on the restructuring plan. Barron’s: Turnaround continues
• Positive Sentiment: Comparable sales returned to positive growth, supporting the narrative that the turnaround is gaining traction. Seeking Alpha: Comparable sales growth
• Positive Sentiment: Board declared a quarterly cash dividend of $0.25/share (paid April 24; ex‑dividend April 10), a sign of confidence in cash generation. Seeking Alpha: Dividend announcement
• Neutral Sentiment: 2026 guidance is mixed — management gave an EPS range of $2.40–$3.10 (around Street expectations) but set revenue guidance slightly below consensus ($8.5–8.6B vs. ~$8.7B), making the outlook balanced between optimism on margins and caution on top‑line recovery. Yahoo Finance: Beats and guidance
• Neutral Sentiment: Analyst stance remains cautious — William Blair kept a Hold rating, saying early turnaround progress is encouraging but not yet enough to upgrade. Watch for further analyst revisions. TipRanks: Hold rating
• Negative Sentiment: Revenue weakness and store closures — Q4 revenue was down ~1.2% year‑over‑year and the company continues to close stores as part of restructuring, a drag on top‑line growth despite profit improvement. WSJ: Profit amid store closures

About Advance Auto Parts

Advance Auto Parts, Inc (NYSE: AAP) is a leading distributor of automotive aftermarket parts, accessories, and maintenance items. The company operates a network of stores and distribution centers across North America, serving both do-it-yourself (DIY) customers and professional service providers. Advance Auto Parts focuses on offering a comprehensive selection of replacement parts, batteries, engine components, and performance products for cars and light trucks.

The company’s product portfolio includes engine oils and lubricants, cooling system components, brake and suspension parts, filters, belts, hoses, and diagnostic tools.