Advance Auto Parts Restructuring Shows Early Signs of Margin Improvement
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 19 2026
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Source: NASDAQ.COM
- Restructuring Implementation: Under new CEO Shane O'Kelly, Advance Auto Parts has closed over 700 locations to refocus operations in areas where it ranks No. 1 or No. 2, aiming to enhance operational efficiency and profitability.
- New Store Strategy: The company plans to open 100 new 'market hub' stores by 2027, which will carry 3 to 4 times the stock-keeping units of typical stores, significantly improving same-day delivery capabilities to meet professional market demands.
- Signs of Margin Improvement: Although past restructuring efforts have failed to deliver lasting results, there are early signs of a slight uptick in profit margins, suggesting that this restructuring may be effective and attracting deep-value investors willing to take on some risk.
- Competitive Market Pressure: Despite Advance Auto Parts' attractive price-to-sales ratio, the company consistently fails to generate EBITDA margins comparable to its peers, necessitating caution from investors given the intense competition in the market.
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Analyst Views on AAP
Wall Street analysts forecast AAP stock price to rise over the next 12 months. According to Wall Street analysts, the average 1-year price target for AAP is 55.23 USD with a low forecast of 40.00 USD and a high forecast of 65.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
17 Analyst Rating
1 Buy
14 Hold
2 Sell
Hold
Current: 49.590
Low
40.00
Averages
55.23
High
65.00
Current: 49.590
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.
Pursue Wealth Partners Fully Exits Advance Auto Parts Stake
- Stake Change: Pursue Wealth Partners LLC reported on January 26 that it fully sold its 65,664 shares of Advance Auto Parts, valued at approximately $4 million, indicating a pessimistic outlook on the company's future performance.
- Asset Management Impact: This position accounted for 2.2% of the fund's $182 million in assets under management at the end of Q3, and the complete exit may affect the diversification of its investment portfolio.
- Performance Comparison: While Advance Auto Parts achieved a 3% increase in same-store sales in the latest quarter, its stock price has declined by 1.8% over the past year, contrasting sharply with the S&P 500's total return of 15.4%, reflecting market concerns about its prospects.
- Competitive Pressure: The company is executing a turnaround plan by closing underperforming stores and opening new ones, but in a highly competitive market, investors should monitor sustained same-store sales growth before deciding to invest further in the company.
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