Advance Auto Parts (AAP) AI Stock Analysis

• Market Cap: $3.23B
• Dividend Yield: 2.53%
• Average Volume (3M): 2.00M
• Price to Earnings (P/E): 74.1
• Beta (1Y): 0.58
• 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: 2,250,451
• 30 Day Avg. Volume: 2,002,674
• 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: 2.28
• Enterprise Value/Revenue: 0.86
• Enterprise Value/Gross Profit: 1.99
• Enterprise Value/Ebitda: 16.04
• 1Y Price Target: $57.85
• Price Target Upside: 11.25% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 15
• EPS Forecast (FY): 2.72
• Revenue Forecast (FY): $8.55B

• Rating: 48 Neutral
• Price Target: $50.00 ▼(-3.85% Downside)
• Action: Reiterated Date: 02/15/26
• Date: Action: Reiterated 02/15/26

The score is held down primarily by weak financial performance—thin profitability, higher leverage, and recently negative operating/free cash flow. Technicals are supportive with a strong uptrend but show overbought conditions. Valuation is a headwind given the very high P/E, while the earnings call provided a partial offset with improving margin/FCF guidance but notable execution and near-term cost headwinds.

Positive Factors

Omnichannel scale & diversified customer base

Advance's large physical footprint and distribution network plus an omnichannel model serving both professional installers and DIY customers creates durable scale advantages. Broad store/DC coverage supports fast pro fulfillment, strong supplier leverage, wide SKU reach and demand diversification that underpin steady revenue over cycles.

Margin recovery and profitability improvement

Meaningful margin expansion and a return to adjusted profitability reflect structural progress from sourcing, assortment and footprint actions. Sustained gross- and operating-margin gains indicate the company can convert sales into earnings more reliably if supply chain and merchandising initiatives remain on track.

Material liquidity and improved leverage target

Substantive cash reserves and an undrawn revolver provide durable financial flexibility to fund CapEx, store openings and DC consolidation while managing debt maturities. This liquidity buffer reduces near-term refinancing risk and supports execution of multi-year efficiency investments.

Negative Factors

Weak cash generation

Persistent negative operating and free cash flow reduces internal funding for growth and deleveraging, forcing reliance on external financing or supplier programs. Over a multi-quarter horizon, weak cash conversion constrains reinvestment, increases financing costs and limits cushion for execution slippages.

Elevated leverage and rising debt

Higher absolute debt and rising leverage reduce balance-sheet flexibility and increase interest exposure. With profitability only modestly positive, debt servicing and covenant risk can limit strategic options and magnify downside if retail demand or margin recovery falters over the next several quarters.

Execution risk on strategic initiatives

The margin and efficiency targets depend on complex initiatives—DC consolidation, assortment transitions, store upgrades—that require sustained execution. Delays or subpar rollout would push out margin gains and cash flow improvements, making the recovery contingent on operational execution rather than immediate structural advantages.

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

Advance Auto Parts generates revenue primarily through the sale of automotive parts and accessories in its retail stores and online platforms. The company's revenue model is based on a combination of direct sales to consumers and professional installers, where it sells products like replacement parts, tools, and maintenance items. Key revenue streams include in-store sales, e-commerce sales, and professional services. Additionally, Advance Auto Parts has established partnerships with various automotive suppliers and manufacturers, which help ensure a broad product offering and competitive pricing. Factors contributing to its earnings include the growing demand for vehicle maintenance, the increasing complexity of automotive technology that necessitates professional repairs, and strong brand recognition among consumers.

Advance Auto Parts Financial Statement Overview

Summary

Overall fundamentals are weak: profitability only recently returned and remains thin, leverage is elevated (debt-to-equity ~2.38x), and operating/free cash flow were negative most recently (OCF about -$46M; FCF about -$298M), increasing financial risk despite improving revenue.

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	3.76B	3.41B	3.86B	4.23B	4.92B
EBITDA	433.00M	-395.08M	310.24M	759.36M	1.08B
Net Income	44.00M	-335.79M	29.73M	464.40M	596.62M
Balance Sheet
Total Assets	12.63B	10.80B	12.28B	11.99B	12.19B
Cash, Cash Equivalents and Short-Term Investments	3.12B	1.87B	503.47M	270.81M	601.43M
Total Debt	7.47B	3.69B	3.83B	3.65B	3.37B
Total Liabilities	10.43B	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: 52.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 52 is below the 20-day moving average (MA) of 54.03, above the 50-day MA of 47.10, and above the 200-day MA of 51.56, indicating a neutral trend. The MACD of 1.95 indicates Positive momentum. The RSI at 44.65 is Neutral, neither overbought nor oversold. The STOCH value of 9.30 is Positive, 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	$1.85B	28.45	12.98%	―	9.24%	35.68%
ASO	67 Neutral	$4.08B	11.18	18.34%	1.04%	-0.65%	-10.35%
GPC	63 Neutral	$16.35B	250.89	1.51%	3.33%	3.26%	-25.41%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
EYE	57 Neutral	$2.08B	-769.94	-0.37%	―	-1.58%	85.04%
BBWI	53 Neutral	$4.76B	7.15	―	4.16%	-1.04%	-20.88%
AAP	48 Neutral	$3.23B	74.07	3.11%	2.53%	-19.41%	-957.94%

Advance Auto Parts Corporate Events

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.