Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 10 Apr, 26 | AAP | Buy | USD 56.53 | USD 59.4 | USD 63.0 | 13 days | Closed |
6.46%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Advance Auto Parts, Inc. provides automotive aftermarket parts. The company offers batteries and battery accessories; belts and hoses; brakes and brake pads; chassis parts; 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 provides air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluid; electrical wire 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 oil; oil filters; part cleaners and treatments; and transmission fluid. Further, it provides battery and wiper installation; engine light scanning; electrical system testing, including batteries, starters, and alternators; oil and battery recycling; and loaner tool program services. The company serves professional installers and do-it-yourself customers. It operates stores and independently owned branded stores in the United States, Canada, Puerto Rico, the U.S. Virgin Islands, Mexico, and various Caribbean islands primarily under the Advance Auto Parts and Carquest trade brands. The company also offers its products online. The company was founded in 1929 and is based in Raleigh, North Carolina.
Adjusted Earnings Growth: Adjusted diluted EPS rose to 2.26 in FY25 compared with -0.29 in FY24
Gross Margin Strengthening: Gross margin increased to 43.4% in FY25 compared with 37.5% in FY24
Weak Operating Cash Flow: Net cash from operating activities deteriorated to USD -46 million in FY25 compared with USD 141 million in FY24
Revenue Decline: Net sales declined to USD 8.6 billion in FY25 compared with USD 9.1 billion in FY24
Ongoing restructuring execution challenges, declining revenues, elevated leverage, and weak cash flow generation collectively pose risks to the company’s ability to achieve sustained profitability and financial stability.
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 56.53 | 50.0 | 59.4 | 63.0 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Performance and Sales Trends: During FY2025, the company reported net sales of FY25 USD 8.6 billion compared with FY24 USD 9.1 billion, reflecting a decline in topline performance despite operational adjustments. However, the company achieved a return to positive comparable store sales growth of FY25 0.8%, marking a recovery after multiple years of contraction and indicating early stabilization in core demand trends.
Margin Expansion Driven by Strategic Initiatives: The company demonstrated notable improvement in profitability metrics, with adjusted operating margin expanding to FY25 2.5% from FY24 0.4%. This improvement was supported by operational efficiencies, strategic sourcing initiatives, and benefits from restructuring actions, reflecting meaningful progress in margin recovery efforts.
Gross Profit Improvement and Cost Optimization: Gross profit increased to FY25 USD 3.7 billion compared with FY24 USD 3.4 billion, while gross margin expanded to FY25 43.4% from FY24 37.5%. This expansion was driven by improved product margins, supply chain efficiencies, and the normalization of prior-year restructuring-related impacts, highlighting stronger cost discipline.
Operating Efficiency and Expense Rationalization: Selling, general and administrative expenses declined to FY25 USD 3.8 billion compared with FY24 USD 4.1 billion, with SG&A as a percentage of sales improving to FY25 43.9% from FY24 45.3%. The reduction reflects benefits from store optimization initiatives, lower operating footprint, and disciplined cost management under the restructuring plan.
Earnings Recovery and Profitability Turnaround: The company reported a significant turnaround in earnings, with diluted earnings per share improving to FY25 USD 1.13 compared with a loss of FY24 USD -9.80. Adjusted diluted EPS also improved materially to FY25 USD 2.26 from FY24 USD -0.29, supported by margin expansion and reduced restructuring-related charges.
Cash Flow and Liquidity Position: Despite earnings improvement, operating cash flow weakened, with FY25 net cash used in operating activities at USD -46 million compared with FY24 positive USD 141 million. Free cash flow further deteriorated to FY25 USD -298 million versus FY24 USD -40 million, largely due to restructuring-related cash outflows and ongoing investments.
Balance Sheet and Capital Structure Developments: The company strengthened its liquidity position with cash and cash equivalents increasing to FY25 USD 3,123 million from FY24 USD 1,869 million. However, this was accompanied by a significant rise in long-term debt to FY25 USD 3,412 million compared with FY24 USD 1,789 million, indicating increased leverage to support strategic initiatives and refinancing activities.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to Advance Auto Parts Inc (NYSE: AAP) at the closing market price of USD 56.53, as on April 09, 2026
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Cyclical Industry: Auto Parts
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| AAP Advance Auto Parts Inc |
1.99 3.82% | 54.03 | 51.97 | 20.70 | 0.41 | 1.57 | 0.65 | 17.36 |
| AZO AutoZone Inc |
11.32 0.38% | 3005.45 | 25.25 | 24.21 | 3.05 | 13.38 | 3.65 | 17.03 |
| DNZOF DENSO Corporation |
- -% | 12.65 | 15.84 | 12.36 | 0.005 | 1.04 | 0.71 | 5.53 |
| BRDCF Bridgestone Corporation |
- -% | 21.11 | 35.97 | 11.93 | 0.0077 | 1.18 | 1.00 | 5.87 |
| DNZOY Denso Corp ADR |
0.14 1.16% | 12.24 | 15.00 | 11.82 | 0.0044 | 1.00 | 0.71 | 5.53 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on April 10, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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