Advance Auto Parts Downgraded to Sell Amid Earnings Miss and Weak Outlook

Advance Auto Parts (NYSE:AAP) is a leading automotive aftermarket parts provider in North America, offering a wide range of products, including replacement parts, accessories, batteries, and maintenance items for cars and trucks. AAP competes with other major players in the industry, such as AutoZone and O'Reilly Automotive.

On May 22, 2025, AAP reported an earnings per share (EPS) of -$0.22, which was significantly better than the estimated EPS of -$0.82. The company achieved an earnings surprise of 72.84%, as highlighted by Zacks. Despite a negative price-to-earnings (P/E) ratio of -8.19, AAP's performance exceeded expectations.

AAP also reported revenue of approximately $2.58 billion, surpassing the estimated revenue of about $2.51 billion. This revenue figure, although down 7% year over year, exceeded the Zacks Consensus Estimate by 3.34%. The company has exceeded consensus revenue estimates three times in the last four quarters, demonstrating its ability to outperform market expectations.

The positive market reaction to AAP's results is evident, with shares surging by approximately 46% as of 10:45 a.m. ET. This comes after a challenging year where the company's stock had lost more than half its value due to poor performance and broader economic concerns. Investors' low expectations were pleasantly surprised by the company's results and strategic initiatives.

AAP has been actively pursuing a transformation plan, which includes closing hundreds of stores and opening new ones in more strategic locations. Despite the challenges, the company has reiterated its guidance, affirming that its restructuring plan is progressing well. The debt-to-equity ratio of 1.70 suggests that AAP has a significant amount of debt compared to its equity, but the current ratio of 1.32 indicates a reasonable level of liquidity to cover short-term liabilities.

Advance Auto Parts (NYSE:AAP) surged 46% intra-day today after reporting a narrower-than-expected Q1 loss and topping revenue forecasts, while reaffirming its full-year guidance despite ongoing macro challenges.

For the quarter, the company posted an adjusted loss of $0.22 per share, a significant beat against analyst expectations of a $0.69 loss. Revenue came in at $2.58 billion, exceeding the $2.51 billion consensus, though down from $2.8 billion a year earlier.

Comparable store sales fell 0.6% year-over-year, excluding the impact of over 500 corporate store closures tied to an ongoing optimization effort. Gross margin contracted slightly to 42.9% from 43.4%, primarily due to liquidation-related markdowns.

Despite headwinds from economic pressures and new tariffs, Advance Auto Parts maintained its 2025 guidance, forecasting net sales between $8.4 billion and $8.6 billion, same-store sales growth of 0.5% to 1.5%, and adjusted EPS between $1.50 and $2.50—bracketing the $1.54 consensus.

The strong Q1 beat and reaffirmed outlook boosted investor confidence in the company’s turnaround plan and operational stability.

Advance Auto Parts (NYSE:AAP) is a leading automotive aftermarket parts provider in North America. The company supplies replacement parts, accessories, and maintenance items for cars and trucks. AAP competes with other major players like AutoZone and O'Reilly Automotive. As the company prepares to release its quarterly earnings on May 22, 2025, investors are keenly watching the anticipated financial results.

Wall Street estimates AAP's earnings per share (EPS) to be -$0.82 for the quarter ending March 2025. The revenue is projected to be approximately $2.51 billion, a decrease of 26.6% from the same quarter last year. These figures highlight the financial challenges AAP is currently facing.

Over the past 30 days, analysts have revised the consensus EPS estimate downward by 3.6%. This revision suggests a reevaluation of AAP's financial performance, which could influence the stock's short-term price movement. If the actual earnings exceed expectations, the stock might see an upward trend. Conversely, if the results fall short, a decline in stock price is likely.

AAP's financial ratios further illustrate its current challenges. The company has a negative price-to-earnings (P/E) ratio of approximately -5.75, indicating negative earnings. The price-to-sales ratio is about 0.20, suggesting the stock is valued at 20 cents for every dolxlar of sales. Additionally, the enterprise value to sales ratio is around 0.38, reflecting the company's total valuation relative to its sales.

The company's debt-to-equity ratio stands at about 1.70, indicating a relatively high level of debt compared to its equity. However, AAP maintains a current ratio of approximately 1.32, suggesting it has a reasonable level of liquidity to cover short-term liabilities. The upcoming earnings report and management's discussion will be crucial in determining the sustainability of any immediate price changes and future earnings projections.

Advance Auto Parts (NYSE:AAP) delivered stronger-than-expected fourth-quarter results, but its shares dropped 14% intra-day today.

The automotive parts retailer posted an adjusted loss per share of $1.18, which narrowed from the $1.31 loss analysts had forecast. Revenue came in at $2 billion, outpacing the $1.93 billion consensus estimate, signaling better-than-expected demand despite ongoing challenges.

Throughout 2024, Advance Auto Parts focused on restructuring efforts to reposition itself for long-term growth, with total net sales for the year reaching $9.1 billion—down 1.2% from 2023. Comparable store sales also declined 0.7% year-over-year, reflecting softening demand in certain segments.

Looking forward, the company aims to regain momentum in 2025, setting full-year earnings guidance between $1.50 and $2.50 per share on projected revenue of $8.4 billion to $8.6 billion. The midpoint of this earnings range surpasses current analyst expectations of $1.56.

Advance Auto Parts (NYSE:AAP) delivered stronger-than-expected fourth-quarter results, but its shares dropped 14% intra-day today.

The automotive parts retailer posted an adjusted loss per share of $1.18, which narrowed from the $1.31 loss analysts had forecast. Revenue came in at $2 billion, outpacing the $1.93 billion consensus estimate, signaling better-than-expected demand despite ongoing challenges.

Throughout 2024, Advance Auto Parts focused on restructuring efforts to reposition itself for long-term growth, with total net sales for the year reaching $9.1 billion—down 1.2% from 2023. Comparable store sales also declined 0.7% year-over-year, reflecting softening demand in certain segments.

Looking forward, the company aims to regain momentum in 2025, setting full-year earnings guidance between $1.50 and $2.50 per share on projected revenue of $8.4 billion to $8.6 billion. The midpoint of this earnings range surpasses current analyst expectations of $1.56.

CFRA analysts downgraded Advance Auto Parts (NYSE:AAP) from Hold to Sell, citing disappointing third-quarter results and a bleak outlook for the company’s financial performance. The analysts also slashed the 12-month target price to $25 from $55, reflecting diminished growth expectations.

Advance Auto Parts reported an adjusted loss per share of $0.04 for the third quarter, falling well short of the Street consensus estimate of $0.54. Revenue dropped 3% year-over-year to $2.15 billion, missing projections by $520 million. Comparable store sales declined by 2.3%, underperforming expectations by 60 basis points. The weaker-than-anticipated top-line performance raised concerns about the company’s ability to stabilize its operations.

The company revised its 2024 guidance, projecting fourth-quarter net sales of $1.90 billion and an adjusted EPS loss between $1.50 and $0.90. Both figures are significantly below market expectations of $2.00 billion in revenue and a $0.06 EPS gain.

The analysts lowered earnings estimates for 2024 and 2025 to $0.10 and $1.40 per share, respectively, from previous estimates of $2.30 and $3.65. With the company resorting to asset sales and store closures to address operational inefficiencies, the outlook remains grim. CFRA expressed concern over Advance Auto Parts’ ongoing struggles to achieve stability, justifying the downgrade to Sell.