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

Advance Auto Parts (NYSE:AAP) posted its earnings results on Friday. The company reported $0.86 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 firm had revenue of $1.97 billion for the quarter, compared to analyst estimates of $1.95 billion. During the same period last year, the company earned ($10.16) earnings per share. 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 Performance

Shares of NYSE:AAP opened at $58.88 on Friday. The company has a debt-to-equity ratio of 1.55, a current ratio of 1.73 and a quick ratio of 0.88. Advance Auto Parts has a 1 year low of $28.89 and a 1 year high of $70.00. The firm has a market capitalization of $3.53 billion, a PE ratio of -9.36 and a beta of 1.14. The business’s 50 day moving average price is $45.86 and its 200-day moving average price is $52.37.

Advance Auto Parts Announces Dividend

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

Analyst Upgrades and Downgrades

A number of research analysts have weighed in on the stock. Morgan Stanley cut their price objective 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. TD Cowen cut their price target on Advance Auto Parts from $62.00 to $46.00 and set a “hold” rating for the company in a research note on Tuesday, January 20th. Citigroup raised Advance Auto Parts from a “hold” rating to a “buy” rating in a report on Wednesday, January 21st. Weiss Ratings reissued a “sell (d)” rating on shares of Advance Auto Parts in a report on Wednesday, January 21st. Finally, Evercore ISI set a $60.00 price objective on Advance Auto Parts in a research report on Wednesday. Three equities research analysts have rated the stock with a Buy rating, seventeen have assigned a Hold rating and three have given a Sell rating to the company’s stock. According to data from MarketBeat, the stock presently has a consensus rating of “Hold” and an average price target of $51.41.

Institutional Trading of Advance Auto Parts

Several large investors have recently bought and sold shares of the business. Caitong International Asset Management Co. Ltd purchased a new position in Advance Auto Parts in the 3rd quarter worth approximately $31,000. Smartleaf Asset Management LLC increased its holdings in shares of Advance Auto Parts by 290.3% in the second quarter. Smartleaf Asset Management LLC now owns 925 shares of the company’s stock valued at $43,000 after purchasing an additional 688 shares during the last quarter. LGT Financial Advisors LLC purchased a new position in Advance Auto Parts during the third quarter worth approximately $123,000. Headlands Technologies LLC acquired a new position in Advance Auto Parts during the second quarter worth $101,000. Finally, Advisory Services Network LLC acquired a new position in Advance Auto Parts during the third quarter worth $133,000. Hedge funds and other institutional investors own 88.70% of the company’s stock.

Key Advance Auto Parts News

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.