Advance Auto Parts Returns to Positive Sales Growth in 2025
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 2 days ago
0mins
Should l Buy AAP?
Source: seekingalpha
- Sales Growth Resurgence: Advance Auto Parts returned to positive comparable sales growth in 2025 after three years of declines, with total sales down 1.0% year-over-year but comparable store sales up 1.1%, indicating recovery potential under the optimization program.
- Gross Margin Improvement: Adjusted gross profit margin rose to 44.2% from 39.0% last year, driven by the cycling of atypical items related to the 2024 Restructuring Plan and operational savings from Q1 optimization activities, enhancing product margins significantly.
- Operating Income Rebound: Adjusted operating income for Q4 2025 was $73 million, or 3.7% of sales, compared to a loss of $99 million in the prior year, reflecting progress on financial commitments and operational goals.
- 2026 Outlook: Advance Auto Parts projects revenue between $8.49 billion and $8.58 billion for 2026, although below the $8.68 billion consensus, with comparable store sales expected to rise 1% to 2%, showcasing the company's confidence in future performance.
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Analyst Views on AAP
Wall Street analysts forecast AAP stock price to fall
17 Analyst Rating
1 Buy
14 Hold
2 Sell
Hold
Current: 58.220
Low
40.00
Averages
55.23
High
65.00
Current: 58.220
Low
40.00
Averages
55.23
High
65.00
About AAP
Advance Auto Parts, Inc. is an automotive aftermarket parts provider in North America, serving both professional installers (professional) and do-it-yourself (DIY) customers, as well as independently owned operators. The Company's stores and branches offer a range selection of brand names, original equipment manufacturer (OEM) and owned brand automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy-duty trucks. The Company operates approximately 4,788 stores primarily within the United States (U.S.), with additional locations in Canada, Puerto Rico and the U.S. Virgin Islands. The Company also serves approximately 934 independently owned Carquest branded stores across these locations in addition to Mexico and various Caribbean islands. Its stores operate primarily under the Advance Auto Parts and Carquest trade names.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Advance Auto Parts Q4 2025 Earnings Call Insights
- Sales Recovery: Advance Auto Parts reported a 1.1% increase in comparable sales for Q4 after three years of declines, indicating initial success in its sales strategy transformation, with expectations for 2026 comparable sales growth accelerating to the 1% to 2% range, reflecting a gradual recovery in market demand.
- Operating Margin Improvement: The adjusted operating income margin expanded by over 200 basis points from near breakeven levels, reaching 2.5% at the end of 2025, with plans to further increase it to a range of 3.8% to 4.5% in 2026, significantly enhancing the company's profitability and investment appeal.
- Strategic Restructuring Measures: The company plans to close over 500 underperforming stores and add 100,000 new SKUs to enhance product variety and availability, which is expected to optimize operational efficiency and improve customer experience, thereby driving future sales growth.
- Cash Flow Outlook: Despite a negative free cash flow of $298 million in 2025, the company anticipates a return to approximately $100 million in 2026, reflecting efforts in cost optimization and operational efficiency, which bolsters investor confidence in future financial health.
See More
Advance Auto Parts Stock Jumps 4.9% Following Strong Q4 Earnings Report
- Company Performance: Advance Auto Parts shares increased by 4.9% following a better-than-expected profit report for the fourth quarter.
- Market Reaction: The rise in shares indicates positive investor sentiment and confidence in the company's financial performance.
See More
Advance Auto Parts Shares Surge Following Earnings Report as Recovery Progresses.
- Earnings Performance: Advance Auto Parts exceeded earnings expectations, leading to a significant rise in its stock price.
- Market Reaction: The sharp increase in stock value reflects positive investor sentiment following the company's strong financial performance.
See More
U.S. Stocks Decline in Morning Trade as Inflation Rate Eases
- Market Performance: U.S. stocks traded lower this morning, with the Dow Jones index falling approximately 0.1% to 49,387.55, indicating a cautious market sentiment regarding economic outlook.
- Sector Dynamics: Utility stocks gained 1.5%, while communication services stocks fell by 0.6%, reflecting a divergence in market performance across sectors that could influence investors' asset allocation strategies.
- Earnings Highlights: Advance Auto Parts (NYSE:AAP) reported better-than-expected fourth-quarter results, with earnings per share of $0.86 surpassing the analyst consensus of $0.42, and sales reaching $1.973 billion, demonstrating the company's strong performance in a competitive market.
- Economic Data: The annual inflation rate eased to 2.4% in January, the lowest level since May, down from 2.7% in the previous month, which may impact the Federal Reserve's monetary policy decisions.
See More
Advance Auto Parts Declares Quarterly Dividend of $0.25
- Quarterly Dividend Announcement: Advance Auto Parts has declared a quarterly dividend of $0.25 per share, consistent with previous distributions, indicating the company's ongoing ability to maintain stable cash flows, which is likely to attract income-seeking investors.
- Dividend Yield: The forward yield of 1.64% reflects the company's appeal in the current market environment, potentially increasing investor interest in its stock and supporting price stability.
- Payment Schedule: The dividend is payable on April 24, with a record date of April 10 and an ex-dividend date also on April 10, providing investors with clear cash flow expectations that may enhance market confidence.
- Financial Health Indicator: The dividend announcement, coupled with Advance Auto Parts' recent positive comparable sales growth, suggests that the company is gradually restoring financial health during its turnaround process, which could further bolster investor optimism regarding its future growth prospects.
See More
Advance Auto Parts Reports Positive Sales Growth and Improved Profitability
- Sales Growth Resurgence: Advance Auto Parts has returned to full-year positive comparable sales growth after three years of negative results, indicating a significant recovery and stabilization in the market.
- Profitability Improvement: The company reported a gross profit of approximately $0.9 billion in Q4, representing 44% of revenue, a substantial increase from last year's 17.4%, highlighting a marked improvement in profitability.
- Optimistic Future Outlook: For 2026, the company projects revenue between $8.49 billion and $8.58 billion, with comparable sales growth of 1% to 2%, reflecting management's confidence in future performance.
- Increased Shareholder Returns: Advance Auto Parts declared a quarterly dividend of $0.25 per share, payable on April 24, which further enhances investor confidence in the company's future growth trajectory.
See More
Advance Auto Parts Q4 2025 Earnings Call Insights
- Sales Recovery: Advance Auto Parts reported a 1.1% increase in comparable sales for Q4 after three years of declines, indicating initial success in its sales strategy transformation, with expectations for 2026 comparable sales growth accelerating to the 1% to 2% range, reflecting a gradual recovery in market demand.
- Operating Margin Improvement: The adjusted operating income margin expanded by over 200 basis points from near breakeven levels, reaching 2.5% at the end of 2025, with plans to further increase it to a range of 3.8% to 4.5% in 2026, significantly enhancing the company's profitability and investment appeal.
- Strategic Restructuring Measures: The company plans to close over 500 underperforming stores and add 100,000 new SKUs to enhance product variety and availability, which is expected to optimize operational efficiency and improve customer experience, thereby driving future sales growth.
- Cash Flow Outlook: Despite a negative free cash flow of $298 million in 2025, the company anticipates a return to approximately $100 million in 2026, reflecting efforts in cost optimization and operational efficiency, which bolsters investor confidence in future financial health.
See More
Advance Auto Parts Stock Jumps 4.9% Following Strong Q4 Earnings Report
- Company Performance: Advance Auto Parts shares increased by 4.9% following a better-than-expected profit report for the fourth quarter.
- Market Reaction: The rise in shares indicates positive investor sentiment and confidence in the company's financial performance.
See More
Advance Auto Parts Shares Surge Following Earnings Report as Recovery Progresses.
- Earnings Performance: Advance Auto Parts exceeded earnings expectations, leading to a significant rise in its stock price.
- Market Reaction: The sharp increase in stock value reflects positive investor sentiment following the company's strong financial performance.
See More
U.S. Stocks Decline in Morning Trade as Inflation Rate Eases
- Market Performance: U.S. stocks traded lower this morning, with the Dow Jones index falling approximately 0.1% to 49,387.55, indicating a cautious market sentiment regarding economic outlook.
- Sector Dynamics: Utility stocks gained 1.5%, while communication services stocks fell by 0.6%, reflecting a divergence in market performance across sectors that could influence investors' asset allocation strategies.
- Earnings Highlights: Advance Auto Parts (NYSE:AAP) reported better-than-expected fourth-quarter results, with earnings per share of $0.86 surpassing the analyst consensus of $0.42, and sales reaching $1.973 billion, demonstrating the company's strong performance in a competitive market.
- Economic Data: The annual inflation rate eased to 2.4% in January, the lowest level since May, down from 2.7% in the previous month, which may impact the Federal Reserve's monetary policy decisions.
See More
Advance Auto Parts Declares Quarterly Dividend of $0.25
- Quarterly Dividend Announcement: Advance Auto Parts has declared a quarterly dividend of $0.25 per share, consistent with previous distributions, indicating the company's ongoing ability to maintain stable cash flows, which is likely to attract income-seeking investors.
- Dividend Yield: The forward yield of 1.64% reflects the company's appeal in the current market environment, potentially increasing investor interest in its stock and supporting price stability.
- Payment Schedule: The dividend is payable on April 24, with a record date of April 10 and an ex-dividend date also on April 10, providing investors with clear cash flow expectations that may enhance market confidence.
- Financial Health Indicator: The dividend announcement, coupled with Advance Auto Parts' recent positive comparable sales growth, suggests that the company is gradually restoring financial health during its turnaround process, which could further bolster investor optimism regarding its future growth prospects.
See More
Advance Auto Parts Reports Positive Sales Growth and Improved Profitability
- Sales Growth Resurgence: Advance Auto Parts has returned to full-year positive comparable sales growth after three years of negative results, indicating a significant recovery and stabilization in the market.
- Profitability Improvement: The company reported a gross profit of approximately $0.9 billion in Q4, representing 44% of revenue, a substantial increase from last year's 17.4%, highlighting a marked improvement in profitability.
- Optimistic Future Outlook: For 2026, the company projects revenue between $8.49 billion and $8.58 billion, with comparable sales growth of 1% to 2%, reflecting management's confidence in future performance.
- Increased Shareholder Returns: Advance Auto Parts declared a quarterly dividend of $0.25 per share, payable on April 24, which further enhances investor confidence in the company's future growth trajectory.
See More
