Advance Auto Parts Q4 profit beats estimates on lower expenses, margin expansion

Overview

• Automotive parts provider's Q4 revenue and adjusted EPS beat analyst expectations

• Q4 comparable sales grew 1.1%, driven by operational improvements

• Company targets 2026 adjusted operating margin of 3.8% to 4.5%

Outlook

• Advance Auto Parts targets 2026 comparable sales growth of 1.0% to 2.0%

• Company expects 2026 adjusted operating income margin between 3.8% and 4.5%

• Advance Auto Parts plans to open 40 to 45 new stores in 2026

Result Drivers

• COMPARABLE SALES GROWTH - Q4 comparable store sales increased 1.1%, driven by operational improvements and strategic sourcing initiatives

• GROSS PROFIT MARGIN - Q4 gross profit margin improved to 44.2% due to cycling of atypical items and strategic sourcing

• SG&A EXPENSES - Reduction in SG&A expenses as a percentage of net sales due to fewer stores and restructuring impact

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 2 "strong buy" or "buy", 24 "hold" and 3 "sell" or "strong sell"

• The average consensus recommendation for the auto vehicles, parts & service retailers peer group is "buy."

• Wall Street's median 12-month price target for Advance Auto Parts Inc is $53.89, about 7.4% below its February 12 closing price of $58.22

• The stock recently traded at 22 times the next 12-month earnings vs. a P/E of 19 three months ago

Press Release: ID:nBw4bwzqa

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