Advance Auto Parts (NYSE:AAP) Issues Earnings Results, Beats Expectations By $0.45 EPS

Advance Auto Parts (NYSE:AAP) announced its quarterly earnings results on Friday. The company reported $0.86 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.41 by $0.45, FiscalAI reports. Advance Auto Parts had a negative net margin of 4.37% and a positive return on equity of 0.64%. The firm had revenue of $1.97 billion for the quarter, compared to the consensus estimate of $1.95 billion. During the same period in the prior year, the firm posted ($10.16) earnings per share. The firm’s quarterly 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 Price Performance

Shares of Advance Auto Parts stock traded up $1.60 on Friday, hitting $59.82. 2,474,938 shares of the company were exchanged, compared to its average volume of 2,056,770. The company has a quick ratio of 0.88, a current ratio of 1.73 and a debt-to-equity ratio of 1.55. The company has a 50-day moving average price of $45.73 and a 200 day moving average price of $52.36. The stock has a market capitalization of $3.59 billion, a price-to-earnings ratio of -9.51 and a beta of 1.14. Advance Auto Parts has a 1-year low of $28.89 and a 1-year high of $70.00.

Advance Auto Parts News Summary

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

• Positive Sentiment: Q4 beat — AAP reported EPS of $0.86 vs. consensus $0.41 and revenue of $1.97B vs. $1.95B; the company swung to a profit from a large loss a year earlier, underscoring the impact of cost actions and margin recovery. Business Wire: Advance Auto Parts Reports Fourth Quarter and Full Year 2025 Results
• Positive Sentiment: Dividend announced — the company declared a $0.25 per-share dividend, adding a direct shareholder-return element that can support sentiment. Advance Auto Parts declares $0.25 dividend
• Positive Sentiment: Market reaction / momentum — coverage notes the stock “jumped” on the results and commentary, reflecting investor confidence that the turnaround and restructuring are starting to show through in results. Advance Auto Parts Stock Jumps After Earnings. The Turnaround Continues.
• Neutral Sentiment: FY26 guidance is mixed — management set EPS guidance of $2.40–$3.10 (consensus ≈ $2.65) and revenue guidance of $8.5B–$8.6B (below the ~ $8.7B street estimate). The EPS range leaves upside potential but revenue guidance is slightly conservative. Business Wire: Advance Auto Parts Reports Fourth Quarter and Full Year 2025 Results
• Neutral Sentiment: Analyst activity — several analysts revised forecasts ahead of the call and previews expected a beat given AAP’s track record; this sets up further moves depending on quarterly-call color. Advance Auto Parts Earnings Are Imminent; These Most Accurate Analysts Revise Forecasts Ahead Of Earnings Call
• Negative Sentiment: Top-line pressure and store closures — revenue was down ~1.2% YoY and management is continuing to close stores as part of restructuring, which helps margins but reduces sales volume; that keeps growth questions alive. Advance Auto Swings to a Profit Amid Store Closures
• Negative Sentiment: Profitability still uneven — despite the quarter’s profit, trailing metrics show a negative net margin and modest return on equity, signaling the turnaround isn’t complete and future quarters will need consistent execution. Advance Auto Parts Earnings Report & Materials

Analyst Ratings Changes

Several equities research analysts have recently issued reports on AAP shares. Morgan Stanley lowered their target price on shares of Advance Auto Parts from $55.00 to $45.00 and set an “equal weight” rating on the stock in a research note on Thursday, January 15th. TD Cowen lowered their price target on Advance Auto Parts from $62.00 to $46.00 and set a “hold” rating on the stock in a research report on Tuesday, January 20th. Royal Bank Of Canada cut their price objective on Advance Auto Parts from $60.00 to $57.00 and set a “sector perform” rating for the company in a research report on Wednesday, February 4th. Evercore reduced their target price on Advance Auto Parts from $58.00 to $56.00 and set an “in-line” rating for the company in a research note on Tuesday, December 16th. Finally, BMO Capital Markets reissued a “market perform” rating and issued a $55.00 price target on shares of Advance Auto Parts in a research note on Friday, October 31st. Three equities research analysts have rated the stock with a Buy rating, seventeen have given a Hold rating and three have given a Sell rating to the stock. According to data from MarketBeat.com, the company presently has an average rating of “Hold” and an average price target of $51.41.

Hedge Funds Weigh In On Advance Auto Parts

A number of institutional investors and hedge funds have recently added to or reduced their stakes in AAP. Federated Hermes Inc. grew its holdings in Advance Auto Parts by 4.4% in the 4th quarter. Federated Hermes Inc. now owns 2,811,675 shares of the company’s stock valued at $110,499,000 after buying an additional 117,648 shares in the last quarter. State Street Corp boosted its position in shares of Advance Auto Parts by 3.9% during the 4th quarter. State Street Corp now owns 2,499,981 shares of the company’s stock valued at $98,249,000 after acquiring an additional 92,861 shares during the last quarter. Maple Rock Capital Partners Inc. boosted its position in shares of Advance Auto Parts by 508.2% during the 3rd quarter. Maple Rock Capital Partners Inc. now owns 951,790 shares of the company’s stock valued at $58,440,000 after acquiring an additional 795,290 shares during the last quarter. Bank of America Corp DE grew its holdings in shares of Advance Auto Parts by 6.5% in the second quarter. Bank of America Corp DE now owns 947,754 shares of the company’s stock valued at $44,061,000 after purchasing an additional 57,900 shares during the period. Finally, Marshall Wace LLP increased its position in Advance Auto Parts by 5.6% during the third quarter. Marshall Wace LLP now owns 898,745 shares of the company’s stock worth $55,183,000 after purchasing an additional 47,992 shares during the last quarter. Institutional investors and hedge funds own 88.70% of the company’s stock.

Advance Auto Parts Company Profile

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.