One-glance verdict
Undervalued
$127.13 our estimate vs market $43.61
Wall Street consensus: $49.95 (-60.7% lower than our fair-value estimate)
66% below our estimate, below the bear case
Fundamentals snapshot
Advance Auto Parts, Inc.
AAP · NYQ · Consumer Cyclical · Auto Parts
Current price
$43.61
52-week range
$37.89 - $65.20
Market cap
$2.63B
Balance sheet
Stretched
1.16x Concerning
Net debt $2.51B. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
1 Risk
3 rewards · 1 risks
- Reward Revenue grew 0.2% last year.
- Reward Returns 4.9% on equity, ahead of 25% of its peers.
- Reward Free cash flow was positive in 8/10 years.
- Risk Operating margin compressed from 5.7% to 5.5% over 3 years.
What this company does
Advance Auto Parts, Inc.
Advance Auto Parts sells car parts for both professional mechanics and people who fix their own cars, with money coming mainly from selling these parts in their stores and online across North America. This matters because they are a key supplier for keeping vehicles running smoothly for everyday drivers and businesses.
How the company got here
Advance Auto Parts began in 1932 when Arthur Taubman purchased a small chain of three stores called Advance Stores. Initially, these stores sold a variety of products, including automotive parts, toys, and appliances. Over time, the company began to specialize, and by 1985, it officially became Advance Auto Parts, focusing solely on automotive aftermarket products. A significant turning point was the 1998 acquisition of Western Auto Supply Company, which doubled the company's size and expanded its reach. Further growth came through strategic acquisitions, like Discount Auto Parts in 2001 and General Parts International (which included Carquest and WorldPac) in 2014, solidifying its position as a major player in the North American automotive aftermarket.
What it actually does
Advance Auto Parts is a major retailer and distributor of automotive aftermarket parts. Think of them as a one-stop shop for car owners and professional mechanics who need to repair or maintain vehicles. They sell everything from essential engine components and brake parts to batteries, fluids, and cleaning supplies. Essentially, if a part of your car needs replacing or routine upkeep, Advance Auto Parts aims to have it. They serve both individuals who work on their own cars (do-it-yourself customers) and professional repair shops.
Advance Auto Parts
This is the company's primary retail brand, operating a large network of stores across the United States, Canada, Puerto Rico, and the U.S. Virgin Islands. These stores cater to both individual car owners looking for parts for their own vehicles and professional mechanics who need parts for customer repairs. The Advance Auto Parts brand represents the core of the company's business, offering a wide selection of parts, accessories, and maintenance items.
Carquest
Carquest is another significant brand under the Advance Auto Parts umbrella, operating a substantial number of independently owned stores. These stores also serve both professional installers and do-it-yourself customers, often with a strong focus on providing parts and services to professional repair shops. Carquest stores are a key part of Advance's strategy to reach a broad customer base across North America, including in Mexico and various Caribbean islands.
Worldpac
Worldpac is a business that Advance Auto Parts acquired, focusing on the distribution of aftermarket parts. It serves professional repair shops and dealerships, providing a wide range of parts, particularly for import and domestic vehicles. Worldpac is a crucial part of Advance's strategy to be a comprehensive supplier to the professional automotive repair industry, offering a deep catalog of products.
What management is betting on now
Advance Auto Parts is currently focused on a turnaround strategy aimed at improving its core business operations. Key priorities include enhancing parts availability in stores, which means making sure the right parts are in stock when customers need them. They are also working to refine their product selection and pricing to be more competitive. A major focus is rebuilding relationships and service levels with professional repair shops, as this is a critical customer segment. Additionally, management is concentrating on simplifying the company's cost structure and improving overall efficiency to drive better financial performance and cash generation.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q3
$32.85M
FY2025 Q4
$-124.39M
FY2026 Q1
$-198.00M
FY2026 Q2
$-3.00M
FY2026 Q3
$-76.00M
FY2026 Q4
$-21.00M
FY2027 Q1
$-75.00M
FY2027 Q2
$195.00M
Revenue
$2.00B
Net income
$55.00M
Diluted EPS
0.90
Operating cash flow
$271.00M
Free cash flow
$195.00M
Fetching…
Sources
Revenue
$2.61B
Net income
$24.00M
Diluted EPS
0.39
Operating cash flow
$-19.00M
Free cash flow
$-75.00M
Fetching…
Sources
Revenue
$1.97B
Net income
$6.00M
Diluted EPS
0.10
Operating cash flow
$72.00M
Free cash flow
$-21.00M
Fetching…
Sources
Revenue
$2.04B
Net income
$-1.00M
Diluted EPS
-0.02
Operating cash flow
$-12.00M
Free cash flow
$-76.00M
Fetching…
Sources
Revenue
$2.01B
Net income
$15.00M
Diluted EPS
0.25
Operating cash flow
$50.00M
Free cash flow
$-3.00M
Fetching…
Sources
Revenue
$2.58B
Net income
$24.00M
Diluted EPS
0.40
Operating cash flow
$-156.00M
Free cash flow
$-198.00M
Fetching…
Sources
Revenue
$857.03M
Net income
$-414.78M
Diluted EPS
-6.93
Operating cash flow
$-73.30M
Free cash flow
$-124.39M
Fetching…
Sources
Revenue
$2.15B
Net income
$-6.01M
Diluted EPS
-0.10
Operating cash flow
$70.12M
Free cash flow
$32.85M
Fetching…
Sources
Is it cheap or expensive?
Fair value $127.13 vs current price $43.61
Wall Street consensus is the average analyst price target: $49.95 (-60.7% lower than our fair-value estimate).
Our most-likely fair value is $127.13 a share — about 191.5% above today's price of $43.61, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Stretched
Net debt $2.5B. Interest coverage 1.2x.
Net debt
$2.51B
Interest coverage
1.16x
Advance Auto Parts, Inc.'s profit covers its interest bill about 1.2 times over. which is weaker than most peers shown here.
Stretched
Worse cushion
Baseline
Better cushion
AAP
BASELINE
Advance Auto Parts, Inc.
Total debt $5.63B Interest coverage 1.16x This is the baseline the peer rows are being compared against.
Total debt $9.59B Interest coverage 14.72x +1,171% vs AAP Carries about 12.7x more debt cushion than AAP.
Total debt $12.86B Interest coverage 7.42x +540% vs AAP Carries about 6.4x more debt cushion than AAP.
Total debt $6.65B Interest coverage 7.43x +541% vs AAP Carries about 6.4x more debt cushion than AAP.
Total debt $528.25M Interest coverage 12.47x +976% vs AAP Carries about 10.8x more debt cushion than AAP.
Total debt $88.37M Interest coverage 101.67x +8,678% vs AAP Carries about 87.8x more debt cushion than AAP.
What you should know
The case for and against AAP
3 Rewards
1 Risk
Rewards
-
Revenue grew 0.2% last year.
-
Returns 4.9% on equity, ahead of 25% of its peers.
-
Free cash flow was positive in 8/10 years.
Risks
-
Operating margin compressed from 5.7% to 5.5% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
24.23x
Forward P/E
11.20x
P/B
1.16x
P/S
0.31x
EV/EBITDA
8.26x
PEG ratio
0.72x
Profitability
How much profit each dollar creates
Gross margin
45.1%
Operating margin
5.5%
Net margin
1.0%
ROE
4.9%
ROA
2.1%
Health
Liquidity and balance-sheet strength
Debt / equity
2.49x
Current ratio
1.75x
Quick ratio
0.82x
Total debt
$5.63B
Total cash
$3.12B
Growth
How the business has been compounding
Revenue TTM
$8.62B
Revenue 5Y CAGR
-6.0%
EPS TTM
1.80
EPS 5Y CAGR
-55.5%
Cash flow
How much cash the business throws off
Operating CF TTM
$312.00M
Free CF TTM
$-298.00M
FCF margin
-3.5%
Dividend
Shareholder payout
Yield
2.2%
Payout ratio
55.6%
Last ex-div date
2026-10-09