Advance Auto Parts (AAP) AI Stock Analysis

• Market Cap: $3.57B
• Dividend Yield: 1.67%
• Average Volume (3M): 2.22M
• Price to Earnings (P/E): 59.6
• Beta (1Y): 0.67
• Revenue Growth: -22.50%
• EPS Growth: -35219.23%
• Country: US
• Employees: 33,200
• Sector: Consumer Cyclical
• Sector Strength: 80
• Industry: Specialty Retail
• EPS (TTM): 0.69
• Shares Outstanding: 59,984,947
• 10 Day Avg. Volume: 1,314,740
• 30 Day Avg. Volume: 2,224,402
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.62
• Enterprise Value/Revenue: 0.61
• Enterprise Value/Gross Profit: 1.66
• Enterprise Value/Ebitda: -12.84
• 1Y Price Target: $57.77
• Price Target Upside: -3.81% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 18

• Rating: 48 Neutral
• Price Target: $56.00 ▼(-6.76% Downside)

Advance Auto Parts faces significant financial challenges, with declining revenues and operational inefficiencies being the most impactful factors. While technical indicators and corporate events provide some positive signals, the overall financial instability and valuation concerns weigh heavily on the stock's outlook. The company's strategic initiatives and new credit facility offer potential for improvement, but caution is advised given the current financial state.

Positive Factors

Competitive Position

AAP has reduced delivery times from stores by implementing new labor models and improved procedures, putting the company in a stronger competitive position.

Operational Efficiency

Advance Auto Parts has introduced a new assortment framework tailored to individual stores using AI tools, which has resulted in a 50 basis points comp lift in stores with this program.

Sales Performance

Management guided sales between $1,980 million and $2,000 million, landing above consensus.

Negative Factors

Financial Outlook

Management cut the midpoint of its EPS outlook by 15%, on higher interest expense related to its recent debt offering to shore up its supply chain financing program.

Market Performance

Shares are down some 8% as of midday, after slightly recovering from a midteens dip at the open.

Market Share

Recent data suggests Advance Auto Parts could be losing market share.

Advance Auto Parts Business Overview & Revenue Model

Company Description

Advance Auto Parts, Inc. is a leading retailer and distributor of automotive aftermarket parts, accessories, and maintenance items in North America. The company operates both physical stores and an online platform, providing a wide range of products including batteries, brake parts, engine components, and performance accessories. Advance Auto Parts serves both professional installers and do-it-yourself customers, positioning itself in the automotive sector as a one-stop shop for all automotive needs.

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. The company operates on a multi-channel retail model, allowing it to reach customers through brick-and-mortar locations as well as digital platforms. Key revenue streams include sales from over 4,800 stores across the United States, Canada, and Puerto Rico, as well as online sales through its website and mobile app. Additionally, Advance Auto Parts benefits from partnerships with major automotive manufacturers and suppliers, which help to ensure a diverse and reliable product inventory. The company also generates income through its professional sales business, which serves automotive repair shops and commercial accounts, further diversifying its revenue base.

Advance Auto Parts Financial Statement Overview

Summary

Advance Auto Parts is experiencing significant financial challenges, with declining revenues, operational inefficiencies, and net losses impacting profitability. The high leverage and weakened equity position further exacerbate financial risk. Cash flow constraints could hinder the company's ability to manage its financial obligations and invest in growth. Overall, the financial statements indicate a need for strategic adjustments to improve stability and financial health.

Income Statement

The income statement of Advance Auto Parts shows a challenging period with declining revenue and profitability. Gross Profit Margin for TTM is 36.96%, which demonstrates some strength in cost management. However, the Net Profit Margin is negative at -3.74%, indicating losses. Revenue growth has been negative over the past years, with a significant decline from 2023 to 2024. The company also faces negative EBIT and EBITDA margins at -9.34% and -4.78% respectively, pointing to operational inefficiencies.

Balance Sheet

Advance Auto Parts' balance sheet reveals a moderately leveraged position with a Debt-to-Equity Ratio of 1.67 in TTM. The Return on Equity is negative due to net losses, reflecting poor returns to shareholders. The Equity Ratio stands at 20.69%, which shows a reasonable proportion of equity financing but might be insufficient given the current financial strain. Overall, the balance sheet suggests potential financial risk due to high leverage and declining equity.

Cash Flow

The cash flow situation appears strained, with negative Free Cash Flow and a declining trend in Operating Cash Flow. The Operating Cash Flow to Net Income Ratio is negative, indicating operational cash flow is not sufficient to cover losses. Free Cash Flow to Net Income Ratio is also negative, highlighting cash constraints. This suggests the company might struggle to fund operations and growth without external financing.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	9.41B	9.09B	9.21B	9.15B	11.00B	10.11B
Gross Profit	3.48B	3.41B	3.86B	4.23B	4.92B	4.48B
EBITDA	-449.70M	-395.08M	310.24M	759.36M	1.08B	947.98M
Net Income	-351.80M	-335.79M	29.73M	464.40M	596.62M	493.02M
Balance Sheet
Total Assets	10.62B	10.80B	12.28B	11.99B	12.19B	11.84B
Cash, Cash Equivalents and Short-Term Investments	1.67B	1.87B	503.47M	270.81M	601.43M	834.99M
Total Debt	3.67B	3.69B	3.83B	3.65B	3.37B	3.05B
Total Liabilities	8.42B	8.63B	9.76B	9.39B	9.07B	8.28B
Stockholders Equity	2.20B	2.17B	2.52B	2.60B	3.13B	3.56B
Cash Flow
Free Cash Flow	-247.90M	-96.17M	44.96M	296.26M	822.62M	701.88M
Operating Cash Flow	-74.06M	84.63M	287.38M	722.22M	1.11B	969.69M
Investing Cash Flow	1.37B	1.35B	-235.49M	-424.45M	-287.31M	-266.90M
Financing Cash Flow	-64.41M	-75.01M	189.27M	-620.70M	-1.06B	-286.00M

Advance Auto Parts Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 60.06
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AAP, the sentiment is Positive. The current price of 60.06 is above the 20-day moving average (MA) of 58.75, above the 50-day MA of 57.36, and above the 200-day MA of 45.27, indicating a bullish trend. The MACD of 0.82 indicates Negative momentum. The RSI at 55.45 is Neutral, neither overbought nor oversold. The STOCH value of 72.61 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for AAP.

Advance Auto Parts Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AZO	78 Outperform	$69.92B	28.35	-14.95%	―	5.15%	1.99%
MELI	78 Outperform	$120.65B	58.60	43.83%	―	38.27%	46.21%
ORLY	70 Neutral	$87.56B	37.14	-174.09%	―	5.15%	5.33%
GPC	67 Neutral	$19.65B	23.47	17.50%	2.90%	2.65%	-32.91%
BBWI	65 Neutral	$6.09B	8.79	-52.83%	2.51%	-0.18%	-18.95%
Sector *	61 Neutral	$17.96B	13.14	-5.29%	3.00%	1.25%	-13.95%
AAP	48 Neutral	$3.57B	59.62	-24.78%	1.67%	-22.50%	-35219.23%

Advance Auto Parts Corporate Events

Advance Auto Parts Secures New $1 Billion Credit Facility

On August 12, 2025, Advance Auto Parts, Inc. entered into a new five-year senior secured first lien asset-based revolving credit facility with Bank of America, N.A., providing up to $1.0 billion in credit. This move is part of their strategic financial management, replacing a prior facility and supporting their operational liquidity. The company reported its second quarter 2025 results, highlighting a return to profitability with net sales of $2.0 billion and a slight increase in comparable store sales. Despite a decrease in net sales compared to the previous year, the company achieved margin expansion due to cost savings from footprint optimization. Advance Auto Parts reaffirmed its full-year sales, operating margin, and free cash flow guidance, indicating confidence in its strategic direction and commitment to shareholder value.

Advance Auto Parts Issues $1.95 Billion in Senior Notes

On August 4, 2025, Advance Auto Parts, Inc. completed a significant financial transaction by issuing $1.95 billion in senior notes, split equally between 2030 and 2033 maturities, with interest rates of 7.000% and 7.375%, respectively. The proceeds will be used to redeem existing debt and support general corporate purposes, including a new asset-based loan facility, enhancing the company’s financial flexibility and positioning in the market.

Advance Auto Parts Announces Credit Agreement Amendment

On July 24, 2025, Advance Auto Parts, Inc. announced Amendment No. 7 to its Credit Agreement, facilitating the issuance of senior notes due in 2030 and 2033. This move is part of the company’s strategic initiatives to optimize assets and improve profitability, following the sale of its Worldpac business in November 2024 for $1.47 billion. The restructuring plan aims to streamline operations, which includes store closures and workforce realignment, reflecting a strategic shift towards the Advance blended-box model.

Advance Auto Parts Holds Annual Stockholders Meeting

On May 15, 2025, Advance Auto Parts held its Annual Meeting of Stockholders, where several key decisions were made. The stockholders elected nine nominees to the Board of Directors, approved an amendment to increase shares in the Omnibus Incentive Compensation Plan, and ratified Deloitte and Touche LLP as the independent accounting firm for 2025. Additionally, a non-binding advisory vote approved executive compensation, while a shareholder proposal for additional executive stock retention requirements was rejected.