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Advance Auto Parts
(NYSE:AAP)
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Rating:45Neutral
Price Target:
$42.00
▼(-24.73% Downside)
Action:Reiterated
Date:08/22/26
The score is held down primarily by weak financial quality (thin margins, shrinking revenue, high leverage, and minimal/volatile free cash flow) and a strongly bearish technical setup with the stock far below key moving averages. These are partially offset by a more constructive earnings-call picture (reaffirmed guidance, improving margins and free cash flow, and deleveraging progress), while valuation remains only modestly supportive due to a high P/E despite a moderate dividend yield.
Positive Factors
Improving Free Cash Flow and Liquidity
The $321M year-over-year free cash flow swing and substantial cash balance indicate improved internal funding and liquidity. If sustained, this gives AAP more capacity to reduce debt and invest in stores, hubs and inventory without relying as heavily on external financing.
Negative Factors
Declining Revenue and DIY Weakness
Shrinking revenue indicates that AAP's recovery is relying more on cost control than market expansion. Persistent DIY weakness can reduce operating leverage, limit inventory productivity and make margin gains harder to sustain across the business.
Read all positive and negative factors
Positive Factors
Negative Factors
Improving Free Cash Flow and Liquidity
The $321M year-over-year free cash flow swing and substantial cash balance indicate improved internal funding and liquidity. If sustained, this gives AAP more capacity to reduce debt and invest in stores, hubs and inventory without relying as heavily on external financing.
Read all positive factors
Advance Auto Parts Key Performance Indicators (KPIs)
Any
Store Count
Indicates the total number of retail locations, reflecting the company's market presence and potential reach to customers. A growing store count can signal expansion and increased sales opportunities.
Indicates the total number of retail locations, reflecting the company's market presence and potential reach to customers. A growing store count can signal expansion and increased sales opportunities.
Data provided by:
The Fly
The FlyAdvance Auto Parts (AAP) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$2.66B
Dividend Yield2.29%
Average Volume (3M)1.64M
Price to Earnings (P/E)31.3
Beta (1Y)0.90
Revenue Growth-1.30%
EPS GrowthN/A
CountryUS
Employees54,007
SectorConsumer Cyclical
Sector Strength84
IndustrySpecialty Retail
Share Statistics
EPS (TTM)1.39
Shares Outstanding60,400,000
10 Day Avg. Volume1,798,662
30 Day Avg. Volume1,641,110
Financial Highlights & Ratios
PEG Ratio-0.47
Price to Book (P/B)1.06
Price to Sales (P/S)0.27
P/FCF Ratio-7.82
Enterprise Value/Market Cap<0.01
Enterprise Value/Revenue<0.01
Enterprise Value/Gross Profit<0.01
Enterprise Value/Ebitda<0.01
Forecast
1Y Price Target
$51.00Price Target Upside-8.60% Downside
Rating ConsensusHold
Number of Analyst Covering18
EPS Forecast (FY)3
Revenue Forecast (FY)$8.54B
Advance Auto Parts Business Overview & Revenue Model
Company Description
Advance Auto Parts, Inc. operates as a leading retailer and supplier of a comprehensive array of automotive replacement components, accessories, batteries, and essential maintenance supplies. Its extensive inventory caters to a wide spectrum of ve...
How the Company Makes Money
AAP primarily makes money by selling automotive aftermarket products and related items across two main customer segments: (1) DIY retail customers who purchase parts and accessories for self-service repairs and maintenance, and (2) professional cu...
Advance Auto Parts Earnings Call Summary
Earnings Call Date:Aug 20, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Nov 18, 2026
Earnings Call Sentiment Positive
The call conveyed meaningful operational progress and financial stabilization — return to positive free cash flow, margin expansion, EPS improvement, DC consolidation, SKU expansion, improving customer metrics (NPS, attachment rates) and Pro channel momentum — while acknowledging persistent near-term pressures in the DIY channel, higher commodity-driven inflation and elevated supply-chain costs. Management reaffirmed full-year targets and outlined concrete actions (pricing, merchandising, market hubs, DC productivity and store labor standards) to drive further improvement.Positive Updates
Return to Positive Free Cash Flow and Strong Liquidity
Generated $120 million of free cash flow year-to-date versus a $201 million outflow in the prior year (swing of ~$321 million). Ended Q2 with a cash balance of approximately $3.1 billion and reaffirmed full-year free cash flow guidance of ~$100 million.
Negative Updates
DIY Channel Weakness and Comparable Sales Decline
Comparable sales slightly declined in Q2; DIY sales fell in the low single-digit range, particularly in the final four weeks of the quarter. Management attributes ~100–150 basis points of comp headwind in Q2 to DIY deceleration, deferred large-ticket projects and weather-related impacts.
Read all updates
Q2-2026 Updates
Positive
Negative
Return to Positive Free Cash Flow and Strong Liquidity
Generated $120 million of free cash flow year-to-date versus a $201 million outflow in the prior year (swing of ~$321 million). Ended Q2 with a cash balance of approximately $3.1 billion and reaffirmed full-year free cash flow guidance of ~$100 million.
Read all positive updates
Company Guidance
Advance reaffirmed full‑year 2026 guidance calling for roughly $8.5B of net sales with comparable‑store sales of 1–2%, full‑year same‑SKU inflation of ~3% (Q2 run‑rate ~4%), and adjusted operating income margin of 3.8–4.5% (≈130–200 bps YoY expansion); gross margin is expected to expand ~110–150 bps to about 45% (gross margin range ~44–45%, with Q3 higher than Q4) including roughly 30 bps of IEEPA/tariff refund benefit, adjusted diluted EPS of $2.60–$3.30 (which assumes ~ $100M of interest income and pretax interest expense of ≈ $210M), capital expenditures of ≈ $300M, full‑year free cash flow of ≈ $100M (YTD FCF $120M vs. a $201M outflow last year), 30–35 new store openings and 15–20 new market hubs this year (5 opened H1, 9 planned in Q3; target ~50 hubs by year‑end and 60 by mid‑2027), an ending cash balance of about $3.1B, and net leverage targeted in the 2.0–2.5x range (ended Q2 at 2.1x), with SG&A expected to be down YoY (contributing ~20–50 bps of leverage, excluding ~$90M of 2025 nonrecurring expenses).Advance Auto Parts Financial Statement Overview
Summary
Income Statement
38
Negative
Balance Sheet
35
Negative
Cash Flow
28
Negative
| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 8.62B | 8.60B | 9.09B | 9.21B | 9.15B | 11.00B |
| Gross Profit | 3.85B | 3.73B | 3.41B | 3.86B | 4.23B | 4.92B |
| EBITDA | 535.00M | 320.00M | -395.00M | 310.00M | 759.36M | 1.08B |
| Net Income | 84.00M | 44.00M | -336.00M | 30.00M | 464.40M | 596.62M |
Balance Sheet | ||||||
| Total Assets | 12.02B | 11.83B | 10.80B | 12.28B | 11.99B | 12.19B |
| Cash, Cash Equivalents and Short-Term Investments | 3.12B | 3.12B | 1.87B | 488.05M | 270.81M | 601.43M |
| Total Debt | 5.21B | 5.22B | 3.69B | 3.83B | 3.65B | 3.37B |
| Total Liabilities | 9.76B | 9.63B | 8.63B | 9.76B | 9.39B | 9.07B |
| Stockholders Equity | 2.26B | 2.20B | 2.17B | 2.52B | 2.60B | 3.13B |
Cash Flow | ||||||
| Free Cash Flow | 23.00M | -298.00M | -96.17M | 61.70M | 335.91M | 817.38M |
| Operating Cash Flow | 312.00M | -46.00M | 84.63M | 287.38M | 736.57M | 1.11B |
| Investing Cash Flow | -352.00M | -239.00M | 1.35B | -235.49M | -424.45M | -287.31M |
| Financing Cash Flow | 1.50B | 1.54B | -75.01M | 189.27M | -620.70M | -1.06B |
Advance Auto Parts Technical Analysis
Negative
55.80
Price Trends
55.45
Negative
55.79
Negative
52.18
Negative
Market Momentum
-3.21
Positive
31.90
Neutral
16.72
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAP, the sentiment is Negative. The current price of 55.8 is above the 20-day moving average (MA) of 53.19, above the 50-day MA of 55.45, and above the 200-day MA of 52.18, indicating a bearish trend. The MACD of -3.21 indicates Positive momentum. The RSI at 31.90 is Neutral, neither overbought nor oversold. The STOCH value of 16.72 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AAP.
Advance Auto Parts Risk Analysis
Advance Auto Parts disclosed 24 risk factors in its most recent earnings report. Advance Auto Parts reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Advance Auto Parts Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $1.66B | 22.53 | 14.05% | ― | 10.80% | 59.70% | |
65 Neutral | $2.70B | 7.35 | 18.01% | 1.20% | 3.77% | 4.71% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
61 Neutral | $3.81B | 4.97 | -61.76% | 4.02% | -2.18% | 14.77% | |
56 Neutral | $19.23B | 525.77 | 0.72% | 3.37% | 5.47% | -95.54% | |
53 Neutral | $1.48B | 28.17 | 5.71% | ― | 7.84% | ― | |
45 Neutral | $2.66B | 31.34 | 3.79% | 1.79% | -1.30% | ― |
* Consumer Cyclical Sector Average
AAP
Advance Auto Parts
43.67
-15.66
-26.39%
GPC
Genuine Parts Company
136.70
2.21
1.64%
BBWI
Bath & Body Works
18.65
-9.49
-33.72%
EYE
National Vision Holdings
17.87
-5.53
-23.63%
RVLV
Revolve Group
22.98
0.29
1.28%
ASO
Academy Sports and Outdoors
42.63
-10.44
-19.68%
Advance Auto Parts Corporate Events
Executive/Board Changes
Advance Auto Parts Announces Chief Human Resources Officer Exit
Neutral
Jun 26, 2026
Advance Auto Parts announced that Executive Vice President and Chief Human Resources Officer Kristen L. Soler will leave the company to pursue other opportunities. Effective June 26, 2026, she is expected to transition into an advisory role throug...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.