Advance Auto Parts (AAP) AI Stock Analysis

• Market Cap: $2.97B
• Dividend Yield: 2.53%
• Average Volume (3M): 1.93M
• Price to Earnings (P/E): 97.2
• Beta (1Y): 0.61
• Revenue Growth: -19.41%
• EPS Growth: -957.94%
• Country: US
• Employees: 33,200
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Specialty Retail
• EPS (TTM): 0.86
• Shares Outstanding: 60,100,000
• 10 Day Avg. Volume: 1,568,702
• 30 Day Avg. Volume: 1,931,862
• 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: 1.71
• Enterprise Value/Revenue: 0.59
• Enterprise Value/Gross Profit: 1.36
• Enterprise Value/Ebitda: 15.83
• 1Y Price Target: $57.93
• Price Target Upside: 17.36% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 16
• EPS Forecast (FY): 2.72
• Revenue Forecast (FY): $8.55B

• Rating: 50 Neutral
• Price Target: $53.00 ▲(7.37% Upside)
• Action: Reiterated Date: 03/12/26
• Date: Action: Reiterated 03/12/26

The score is held back primarily by weak financial performance—thin profitability, higher leverage, and negative recent cash flow. Offsetting this is a more optimistic earnings outlook with guidance pointing to meaningful margin improvement and a return to positive free cash flow, while technicals and valuation are mixed (modest trend improvement but high P/E).

Positive Factors

Margin expansion & profitability recovery

Sustained gross- and operating-margin improvement driven by sourcing and assortment actions has converted sales gains into reported profitability. Management’s multi-hundred-basis-point margin guidance and structural cost actions increase the likelihood margins remain higher over the next several quarters, supporting durable earnings recovery if execution holds.

Supply-chain and footprint optimization

Large-scale real-estate and DC consolidation materially lowers structural SG&A and distribution cost per transaction. Fewer DCs and a tighter store footprint improve fill rates and reduce handling costs, creating persistent operating leverage that supports margin sustainability as volumes normalize over the medium term.

Strong liquidity and capital flexibility

Large cash balance and an undrawn revolver provide funding for planned CapEx, store and hub openings, and working-capital variability without immediate refinancing stress. This liquidity cushion enables the company to invest in supply-chain and merchandising initiatives while pursuing gradual deleveraging toward target leverage levels.

Negative Factors

Negative operating cash flow and free cash flow

Persistently negative operating and free cash flow reduces internal funding for growth and forces reliance on external financing or working-capital programs. With multiple recent years of weak cash conversion, the company faces constrained flexibility to fund reinvestment, repay debt, or absorb further inventory and supplier-timing swings without execution of FCF recovery.

Elevated leverage and weakened returns

Higher absolute debt and elevated leverage increase interest and covenant risk and limit strategic optionality. Weak returns on equity indicate capital has yet to generate attractive profits, so management must both improve operating returns and reduce leverage to restore financial resilience and free up cash for strategic investments.

Execution risk; inventory, LIFO and markdown headwinds

Key margin drivers (merchandising, supply chain, store ops) remain in early rollout, so delays or misexecution could reintroduce markdowns, inventory imbalances and LIFO costs. Persistent LIFO and assortment transition impacts have already pressured near-term margins and cash flow, making near-term fundamentals sensitive to implementation risk.

Advance Auto Parts Business Overview & Revenue Model

Company Description

Advance Auto Parts, Inc. provides 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 offers battery accessories; belts and hoses; brakes and brake pads; chassis and climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wires; radiators and cooling parts; starters and alternators; and steering and alignment parts. It also offers air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluids; electrical wires and fuses; electronics; floor mats, seat covers, and interior accessories; hand and specialty tools; lighting products; performance parts; sealants, adhesives and compounds; tire repair accessories; vent shades, mirrors and exterior accessories; washes, waxes and cleaning supplies; and wiper blades. In addition, the company offers air filters; fuel and oil additives; fuel filters; grease and lubricants; motor oils; oil filters, part cleaners and treatments; and transmission fluids for engine maintenance. Further, it offers battery and wiper installation; engine light scanning and checking; electrical system testing; video clinic; oil and battery recycling; and loaner tool program services. Additionally, the company sells its products through its website. It serves professional installers and do-it-yourself customers. The company operates stores under the Advance Auto Parts, Autopart International, and Carquest brands, as well as branches under the Worldpac name. As of April 23, 2022, it operated 4,687 stores and 311 branches in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada; and served 1,318 independently owned Carquest branded stores in Mexico, Grand Cayman, the Bahamas, Turks and Caicos, and the British Virgin Islands. The company was founded in 1929 and is based in Raleigh, North Carolina.

How the Company Makes Money

AAP primarily makes money by selling automotive aftermarket products and related services through two main customer channels: (1) DIY retail customers who purchase parts and accessories in stores or via e-commerce, and (2) professional customers (often referred to as do-it-for-me or commercial) such as independent repair shops and service providers who buy parts for use in paid repair work. Revenue is generated at the point of sale from a broad assortment that includes hard parts (e.g., braking, engine, drivetrain, and steering/suspension components), maintenance and consumables (e.g., batteries, oil, filters, wiper blades, chemicals), and accessories/tools. The company also earns revenue through ancillary offerings tied to parts sales, such as certain in-store services (e.g., battery-related services) where applicable, and by fulfilling time-sensitive professional orders via local delivery from stores/market hubs to repair shops. Key factors that support earnings include product mix (higher-value repair parts vs. routine maintenance items), the scale of its distribution and store network that enables rapid availability, and relationships with suppliers/brands (including private-label and national brands) that influence pricing, cost of goods, and margins. Specific partnership details and quantitative channel mix are not provided here: null.

Advance Auto Parts Financial Statement Overview

Summary

Overall fundamentals are weak. Profitability only recently returned and remains thin (about ~0.5% net margin, ~1.9% EBIT margin), leverage is elevated (debt-to-equity ~2.38x), and cash generation is pressured with negative operating cash flow and free cash flow in the most recent period.

Income Statement

Profitability has deteriorated meaningfully versus prior years. After solid margins in 2020–2022 (about 4.9%–5.4% net margin), results weakened sharply in 2024 with a sizable loss and negative operating margins, followed by a modest return to profitability in 2026 (net margin ~0.5%, EBIT margin ~1.9%). Revenue has been inconsistent—down slightly in 2024, then up ~10.4% in 2026—but the rebound in sales has not yet translated into healthy earnings power.

Balance Sheet

Leverage has increased and balance sheet flexibility looks pressured. Total debt rose to about $5.2B in 2026, and debt relative to equity moved higher to ~2.38x (from ~1.70x in 2024 and ~0.86x in 2020). Returns on equity also weakened substantially, turning negative in 2024 and only modestly positive in 2026 (~2%), suggesting the company is not currently earning an attractive return relative to its capital base.

Cash Flow

Cash generation has weakened materially and turned negative most recently. Operating cash flow was negative in 2026 (about -$46M) and free cash flow was also negative (about -$298M), following negative free cash flow in 2024 as well; this contrasts with strong positive operating and free cash flow in 2020–2022. The recent pattern implies higher funding needs and less internally generated cash to support operations and the capital structure.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	8.60B	9.09B	9.21B	9.15B	11.00B
Gross Profit	3.73B	3.41B	3.86B	4.23B	4.92B
EBITDA	320.00M	-395.00M	310.00M	759.36M	1.08B
Net Income	44.00M	-336.00M	30.00M	464.40M	596.62M
Balance Sheet
Total Assets	11.83B	10.80B	12.28B	11.99B	12.19B
Cash, Cash Equivalents and Short-Term Investments	3.12B	1.87B	488.05M	270.81M	601.43M
Total Debt	5.22B	3.69B	3.83B	3.65B	3.37B
Total Liabilities	9.63B	8.63B	9.76B	9.39B	9.07B
Stockholders Equity	2.20B	2.17B	2.52B	2.60B	3.13B
Cash Flow
Free Cash Flow	-298.00M	-96.17M	61.70M	335.91M	817.38M
Operating Cash Flow	-46.00M	84.63M	287.38M	736.57M	1.11B
Investing Cash Flow	-239.00M	1.35B	-235.49M	-424.45M	-287.31M
Financing Cash Flow	1.54B	-75.01M	189.27M	-620.70M	-1.06B

Advance Auto Parts Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 49.36
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

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 49.36 is below the 20-day moving average (MA) of 52.45, below the 50-day MA of 50.33, and below the 200-day MA of 52.51, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 41.83 is Neutral, neither overbought nor oversold. The STOCH value of 46.75 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AAP.

Advance Auto Parts Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
RVLV	67 Neutral	$1.63B	29.01	12.82%	―	9.24%	35.68%
GPC	63 Neutral	$13.86B	259.07	1.44%	3.33%	3.26%	-25.41%
ASO	62 Neutral	$3.27B	9.73	18.07%	1.04%	-0.65%	-10.35%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
BBWI	56 Neutral	$4.02B	7.11	-44.22%	4.16%	-1.04%	-20.88%
EYE	52 Neutral	$2.22B	69.37	3.47%	―	-1.58%	85.04%
AAP	50 Neutral	$2.97B	97.23	2.00%	2.53%	-19.41%	-957.94%

Advance Auto Parts Corporate Events

Advance Auto Parts Adds Cynthia Jamison to Board

On March 9, 2026, Advance Auto Parts appointed Cynthia T. Jamison as an independent director to its Board of Directors, with the announcement publicly released on March 10, 2026. Jamison will be compensated under the company’s standard policy for non-employee directors, has no special appointment arrangements, is not yet assigned to any board committee, and is expected to enter the company’s standard indemnification agreement.

Jamison brings extensive experience from prior CFO and COO roles across multiple industries, including serving as CFO of AquaSpy and as a partner at Tatum, along with significant board leadership positions at major consumer and retail companies such as Darden Restaurants, International Flavors & Fragrances, Tractor Supply and Big Lots. Advance Auto Parts’ leadership highlighted her deep retail, governance and leadership expertise as a key asset to support its retail-focused operational initiatives and long-term value creation strategy in what it describes as a healthy and growing automotive aftermarket industry.

The most recent analyst rating on (AAP) stock is a Hold with a $51.00 price target. To see the full list of analyst forecasts on Advance Auto Parts stock, see the AAP Stock Forecast page.

Advance Auto Parts Adds Veteran Retail Leader to Board

On January 12, 2026, Advance Auto Parts appointed Richard “Dick” A. Johnson, the retired chief executive, president and chairman of Foot Locker, as an independent director to its board and a member of its compensation committee, formalizing the move in a January 13, 2026 press release. The addition of Johnson, who also chairs H & R Block’s board and holds multiple other directorships, brings nearly three decades of retail and customer-service experience to Advance as it executes a strategic plan aimed at reinforcing its position as a consistent, reliable auto-parts provider, underscoring the company’s focus on strengthening governance and retail execution in a competitive aftermarket industry.

The most recent analyst rating on (AAP) stock is a Hold with a $42.00 price target. To see the full list of analyst forecasts on Advance Auto Parts stock, see the AAP Stock Forecast page.