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

Advance Auto Parts (NYSE:AAP) announced its earnings results on Friday. The company reported $0.86 earnings per share (EPS) for the quarter, topping the consensus estimate 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 business had revenue of $1.97 billion during the quarter, compared to analyst estimates of $1.95 billion. During the same period last year, the company earned ($10.16) EPS. Advance Auto Parts’s revenue for the quarter 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 3.3%

Shares of NYSE AAP traded up $1.91 during mid-day trading on Friday, reaching $60.13. 2,602,283 shares of the company’s stock traded hands, compared to its average volume of 2,066,756. The company has a debt-to-equity ratio of 1.55, a current ratio of 1.73 and a quick ratio of 0.88. The business has a 50-day simple moving average of $45.73 and a 200 day simple moving average of $52.36. The stock has a market cap of $3.61 billion, a P/E ratio of -9.56 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.

Trending Headlines about Advance Auto Parts

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

Institutional Trading of Advance Auto Parts

Institutional investors and hedge funds have recently modified their holdings of the stock. Caitong International Asset Management Co. Ltd purchased a new stake in shares of Advance Auto Parts in the third quarter valued at about $31,000. Smartleaf Asset Management LLC lifted its stake in shares of Advance Auto Parts by 290.3% during the 2nd quarter. Smartleaf Asset Management LLC now owns 925 shares of the company’s stock valued at $43,000 after buying an additional 688 shares in the last quarter. LGT Financial Advisors LLC bought a new position in shares of Advance Auto Parts in the third quarter worth $123,000. Headlands Technologies LLC bought a new position in Advance Auto Parts in the 2nd quarter worth about $101,000. Finally, Advisory Services Network LLC purchased a new position in Advance Auto Parts during the third quarter valued at approximately $133,000. 88.70% of the stock is owned by hedge funds and other institutional investors.

Analysts Set New Price Targets

AAP has been the subject of several analyst reports. Evercore lowered their price target on shares of 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. Roth Mkm reissued a “neutral” rating and set a $55.00 target price (up previously from $50.00) on shares of Advance Auto Parts in a research note on Monday, October 27th. Citigroup upgraded shares of Advance Auto Parts from a “hold” rating to a “buy” rating in a report on Wednesday, January 21st. Truist Financial set a $48.00 price target on Advance Auto Parts in a report on Wednesday, December 17th. Finally, TD Cowen lowered their price objective on Advance Auto Parts from $62.00 to $46.00 and set a “hold” rating for the company in a research report on Tuesday, January 20th. Three research analysts have rated the stock with a Buy rating, seventeen have assigned a Hold rating and three have issued a Sell rating to the company. According to data from MarketBeat, the company presently has an average rating of “Hold” and an average price target of $51.41.

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.