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

Advance Auto Parts (NYSE:AAP) posted its earnings results on Friday. The company reported $0.86 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.41 by $0.45, FiscalAI reports. The company had revenue of $1.97 billion for the quarter, compared to analyst estimates of $1.95 billion. Advance Auto Parts had a positive return on equity of 0.64% and a negative net margin of 4.37%.The firm’s quarterly revenue was down 1.2% compared to the same quarter last year. During the same quarter in the previous year, the firm earned ($10.16) earnings per share. 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 AAP stock traded up $1.60 during mid-day trading on Friday, reaching $59.82. The stock had a trading volume of 2,474,938 shares, compared to its average volume of 2,056,770. Advance Auto Parts has a 1-year low of $28.89 and a 1-year high of $70.00. The firm has a market cap of $3.59 billion, a price-to-earnings ratio of -9.51 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. The business’s fifty day moving average is $45.73 and its 200-day moving average is $52.36.

Hedge Funds Weigh In On Advance Auto Parts

A number of institutional investors have recently bought and sold shares of the business. Bank of Montreal Can raised its stake in shares of Advance Auto Parts by 8.2% during the 4th quarter. Bank of Montreal Can now owns 9,859 shares of the company’s stock valued at $387,000 after buying an additional 745 shares during the last quarter. CIBC Bancorp USA Inc. acquired a new stake in Advance Auto Parts during the third quarter worth about $393,000. SummitTX Capital L.P. purchased a new position in Advance Auto Parts during the third quarter valued at approximately $470,000. Occudo Quantitative Strategies LP acquired a new position in Advance Auto Parts in the third quarter valued at approximately $399,000. Finally, Glenmede Investment Management LP purchased a new stake in Advance Auto Parts in the 3rd quarter worth approximately $295,000. 88.70% of the stock is owned by hedge funds and other institutional investors.

Key Headlines Impacting 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

Wall Street Analyst Weigh In

A number of research analysts have recently issued reports on AAP shares. Morgan Stanley cut their price objective on shares of Advance Auto Parts from $55.00 to $45.00 and set an “equal weight” rating on the stock in a research report on Thursday, January 15th. Evercore cut their price target on shares of Advance Auto Parts from $58.00 to $56.00 and set an “in-line” rating on the stock in a report on Tuesday, December 16th. Cfra Research raised Advance Auto Parts to a “hold” rating in a research report on Thursday, October 30th. Evercore ISI set a $60.00 price objective on Advance Auto Parts in a research report on Wednesday. Finally, TD Cowen reduced their target price 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. Three investment analysts have rated the stock with a Buy rating, seventeen have issued a Hold rating and three have assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the stock has a consensus rating of “Hold” and an average target price 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.