AAP Stock Forecast & Price Target

Advance Auto Parts is projected to generate sales of $8.574 billion, representing a slight decline of 5.7%, while same-store sales (SSS) are anticipated to grow by 0.9%, with operating margins expected to expand by 180 basis points to reach 2.2%. The company's hub-and-spoke distribution model has notably enhanced performance, with stores serviced by these hubs experiencing approximately a 100 basis point lift in comps, indicating strong operational efficiency. Additionally, despite a challenging economic environment marked by high interest rates increasing the cost of used vehicle purchases, the professional channel continues to show positive trends, contributing to sustained resilience and a favorable outlook for the firm.

Advance Auto Parts has reiterated its full-year outlook, projecting a modest same-store sales growth of 0.5%-1.5% and total sales between $8.4 billion and $8.6 billion, but has also trimmed its earnings per share (EPS) forecast due to heightened interest expenses from a recent debt offering. The company's revised EPS guidance of $1.20-$2.20 represents a significant reduction from prior estimates, indicating increased financial strain and risk to profitability. Key challenges, including sluggish consumer spending, real estate constraints on new unit expansion, intensifying competition, and rising operational costs, further contribute to a negative outlook for Advance Auto Parts's stock performance.