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what it is
Advance Auto Parts sells replacement parts and accessories for people fixing cars themselves or paying a shop.
how it gets paid
Last year Adv. Auto Parts made $8.6B in revenue. DIY retail parts was the main engine at $3.0B, or 35% of sales.
why growth slowed
FY2025 net sales fell about 5.5% to $8.6B after portfolio reshaping, while full-year comparable sales turned positive again following three years of declines.
what just happened
Advance Auto Parts put $2.0B of revenue in the quarter and posted $0.63 EPS.
At a glance
B+ balance sheet — decent shape, but not bulletproof
20/100 earnings predictability — expect surprises
21.5x trailing p/e — priced about right
2.6% dividend yield — cash in your pocket every quarter
8.5% return on capital — nothing to write home about
xvary composite: 38/100 — weak
What they do
Advance Auto Parts sells replacement parts and accessories for people fixing cars themselves or paying a shop.
You get 4,788 stores and 28 distribution centers. That means the part you need is often local, not shipped from a far-off warehouse. Nearly 935 independent Carquest locations extend reach without Advance owning every square foot. Leaving is painful because your dead battery does not wait for a better app.
How they make money
$8.6B
annual revenue · FY2025 net sales were about -5.5% vs. prior year
DIY retail parts
$3.0B
6.0%
Professional installer sales
$2.5B
4.0%
Carquest independent network
$1.5B
2.0%
Commercial programs
$1.0B
0.0%
E-commerce and specialty
$0.6B
12.0%
The products that matter
aftermarket auto parts retail
Retail parts sales
$8.6B revenue
it is the entire $8.6B net sales base, down about 5.5% in FY2025. if this line does not stabilize, nothing else on the page matters much.
entire business
Key numbers
$46
target price
That is 19% above $38.75.
2.6%
cash payout
You get paid while the turnaround runs, but dividend growth is forecast at -10.0%.
2.5%
adj. operating margin (FY2025)
Management cited roughly 2.5% adjusted operating margin for FY2025—still thin, but up vs. the prior turnaround year. GAAP operating income was near breakeven on the same sales base.
$3.4B
long debt
That debt equals 60% of capital, so the balance sheet is not a toy.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 20 / 100
- long-term debt $3.4B (60% of capital)
- net profit margin 4.9% — keeps 5 cents of every dollar in revenue
- return on equity 14% — $0.14 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in AAP 3 years ago → it's now worth $10,250.
The index would have given you $14,770.
source: institutional data · total return
What just happened
beat estimates
Advance Auto Parts put $6.6B of revenue in the quarter and posted $0.63 EPS.
Gross margin was 43.2%. The quarter was bigger than the annual revenue gap suggests, so the turnaround still has real scale.
$2.0B
revenue
$0.63
eps
43.2%
gross margin
the number that mattered
EPS was $0.63 versus a $0.41 estimate, a $0.22 beat or 54%.
-
investors in advance auto parts had little reason to smile in 2025.
-
to wit, shares of the autoparts distributor tumbled nearly 17% in price during the recently ended calendar year, even as the s&p 500 index notched a 16.4% gain over the 12-month stretch.
-
industry peers o’reilly automotive and autozone also underperformed the equity benchmark in 2025.
-
still, with share-price gains of 15.4% and 4.9%, respectively, they fared better than their north carolina-based competitor.
-
management recently expected advance’s comparable-store sales (css) to increase just 1.7%, at best, in fiscal 2025 (ended january 3, 2026).
source: company earnings report, 2026
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What could go wrong
the #1 risk is continued share loss to O’Reilly and AutoZone.
high
market share loss to better-run peers
O’Reilly and AutoZone both outperformed AAP in 2025, and Advance’s own revenue fell 5.4%. In this business, speed, availability, and execution decide who gets the sale. The numbers say Advance is losing that race.
another sales decline hits a company earning just 1.8% net margin on $8.6B of revenue.
med
thin margin meets balance-sheet pressure
the company carries $3.4B in long-term debt, equal to 60% of capital, while paying a 2.6% dividend from a business with a 1.8% net margin. That is manageable if revenue stabilizes. It gets uncomfortable fast if it does not.
with less than 2 cents of profit per revenue dollar, there is not much cushion for another weak quarter.
med
the turnaround bar is low, and it still might be missed
management’s comp-sales target tops out at 1.7%, and the latest quarter still lost $0.02 per share. When the target is stabilization rather than growth, missing it tells you the repair job is taking longer than the stock can afford.
if comp growth misses that 1.7% goal while quarterly EPS stays negative, the recovery thesis loses its core evidence.
another low-single-digit sales decline would pressure a company with $3.4B in debt, a 1.8% net margin, and a turnaround case that already depends on just 1.7% comp growth.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
comparable-store sales growth
management guided to 1.7% at best. if they cannot clear their own bar, the turnaround case gets much thinner.
trend
quarterly revenue trend
the latest quarter was down 5%. you want that number moving toward flat, then positive. stabilization comes before recovery.
risk
net margin
1.8% net margin means almost no room for mistakes. a real recovery needs more than steady sales. it needs a wider profit cushion.
calendar
institutional sponsorship
institutions have been net sellers for two straight quarters. if that continues through the next filings, you are looking at a turnaround with fading sponsorship.
Analyst rankings
short-term outlook
bottom 5%
momentum score 5 — the lowest rating. in human-speak, analysts expect this stock to lag most others near term.
risk profile
average
stability score 3 — about average risk. not a bunker stock, not a biotech lottery ticket.
chart momentum
top 20%
technical score 2 suggests the chart has improved. the fundamentals still rank poorly, so you are looking at conflicting signals.
earnings predictability
20 / 100
low predictability means earnings are hard to model. for a turnaround, that makes a cheap-looking multiple less comforting.
source: institutional data
Institutional activity
institutions have been net selling for 2 consecutive quarters — 162 buyers vs. 181 sellers in 3q2025. total institutional holdings: 72.4M shares. net selling for 2 quarters.
source: institutional data
Price targets
3-5 year target range
$21
$70
$39
current price
$46
target midpoint · +19% from current · 3-5yr high: $80 (+105% · 21% ann'l return)
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