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Wire

Advance Auto Parts Needs to Show Consistent Execution as Industry Tailwinds Recede, UBS Says

Advance Auto Parts' (AAP) fiscal Q1 results indicate that its turnaround is gaining traction, but the company needs to show its outperformance is due to consistent execution as industry tailwinds recede, UBS Securities said in a note Thursday.The company reported another quarter of comparable stores sales growth and an operating margin improvement of over 400 basis points, while taking steps to optimize profitability by reducing reliance on large professional accounts that don't provide a commensurate return on service investment, according to the note."For the stock to work in a meaningful way from here, the path will require consistent execution over the span of several quarters," analysts said, adding that the company needs to generate an extra 250 basis points of margin expansion to attain its long-term target even if it achieves the high end of its full-year operating margin guidance.UBS maintained its neutral rating and adjusted the price target to $65 from $60.Shares of Advance Auto Parts were down 1% in Friday trading.Price: $58.03, Change: $-0.59, Percent Change: -1.01%

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Wire

Advance Auto Parts Turnaround Progressing, but Signs of Topline Momentum Needed, Morgan Stanley Says

Advance Auto Parts' (AAP) Q1 beat was encouraging, but while its turnaround story is progressing, investors still need to see sustained topline momentum and progress toward profitability and debt targets, Morgan Stanley said Thursday in a note.Q1 results reinforce confidence that the company's initiatives are gaining traction. However, execution risk still persists, especially as it navigates a more volatile consumer background, faces tougher comparisons in the second half, and pricing-related benefits roll off, according to the note.The analysts said they view the company's decision to maintain guidance as prudent, given near-term consumer volatility, typical "shoulder season" softness between tax refund spending and peak summer driving, and the start of lapping pricing-related tailwinds.The firm said it is keeping its 2026 EPS estimates unchanged and raising its 2027 estimates by 4%, reflecting the company's unchanged full-year guidance despite the topline and earnings beat, as well as improved visibility into an additional 100 basis points of margin expansion in 2027.Morgan Stanley kept an equal weight rating on Advance Auto Parts and raised the price target to $65 from $60.Price: $56.66, Change: $-1.96, Percent Change: -3.34%

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Sectors

Sector Update: Consumer Stocks Mixed Late Afternoon

Consumer stocks were mixed late Thursday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) decreasing 1% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) adding 0.7%.In corporate news, Stellantis (STLA) is targeting revenue of 190 billion euros ($220.8 billion) by 2030, versus 154 billion euros in 2025. The shares eased 0.1%.Walmart (WMT) issued a fiscal Q2 earnings outlook below market estimates after reporting better-than-expected revenue in Q1. The shares fell 6.8%.Ralph Lauren (RL) outlined full-year revenue guidance implying a slowdown after reporting better-than-expected fiscal Q4 results. The shares jumped 14%.Advance Auto Parts (AAP) cautioned that demand for auto parts and vehicle maintenance may fluctuate amid high gasoline prices after Q1 results came in stronger than expected. The shares rose 14%.

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Wire

Truist Securities Raises Price Target on Advance Auto Parts to $62 From $55, Keeps Hold Rating

Advance Auto Parts (AAP) has an average rating of hold and mean price target of $57.11, according to analysts polled by FactSet.(covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www..com/contact-us)Price: $60.95, Change: $+9.71, Percent Change: +18.95%

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Sectors

Sector Update: Consumer Stocks Mixed in Afternoon Trading

Consumer stocks were mixed Thursday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) falling 1.2% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) increasing 1%.In corporate news, Walmart (WMT) issued a fiscal Q2 earnings outlook below market estimates on Thursday, while the retail giant reported better-than-expected revenue in the previous three-month period. Its shares fell 6.9%.Ralph Lauren (RL) outlined a full-year revenue guidance that implied a slowdown annually, while the luxury apparel maker reported better-than-expected fiscal Q4 results. Its shares jumped past 15%.Advance Auto Parts (AAP) cautioned that demand for auto parts and vehicle maintenance could fluctuate amid high gasoline prices, while the company's Q1 results came in stronger than expected. Advance Auto shares rose more than 18%.

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Advance Auto Parts Flags Demand Volatility, Tops First-Quarter Views
US Markets

Advance Auto Parts Flags Demand Volatility, Tops First-Quarter Views

Advance Auto Parts (AAP) cautioned that demand for auto parts and vehicle maintenance could fluctuate amid high gasoline prices, while the company's first-quarter results came in stronger than expected.The auto parts retailer continues to expect adjusted earnings of $2.40 to $3.10 per share for fiscal 2026, it said Thursday. The consensus on FactSet is for non-GAAP EPS of $2.80. The revenue outlook was unchanged at $8.49 billion to $8.58 billion, versus the Street's $8.56 billion view."Our outlook considers the potential for some near-term demand variability related to continued pressure on the consumer, which is now being intensified by elevated gas prices," Chief Financial Officer Ryan Grimsland said on an earnings call, according to a FactSet transcript.Gasoline prices in the US have surged as supply disruptions caused by the Middle East conflict pushed crude oil costs higher. Consumers don't yet see an immediate relief as the Strait of Hormuz, the most important chokepoint for energy flows, remains largely shut due to the US-Israel war with Iran."We are closely monitoring consumer spending patterns as we transition beyond the recent tax refund tailwinds that have shaped trends in recent months," Chief Executive Shane O'Kelly told analysts. "While higher gas prices may introduce temporary fluctuations in demand, we remain confident in our long-term growth prospects."For the quarter ended April 25, Advance Auto Parts swung to adjusted earnings of $0.77 per share from a loss of $0.22 a year ago, compared with analysts' $0.43 EPS view. Revenue rose to $2.61 billion from $2.58 billion, topping the average analyst estimate of $2.57 billion.The company's stock surged 19% in Thursday trading, and is up 55% so far this year.Comparable sales grew by 3.5% in the first quarter, marking the strongest quarterly performance in five years, Advance Auto Parts said.The professional segment's comparable sales rose by mid-single digits, while the do-it-yourself channel logged low-single-digit growth, O'Kelly said in a statement."We aim to stabilize market share in the near term while positioning ourselves for share gain in the future," O'Kelly told analysts.Price: $60.00, Change: $+8.76, Percent Change: +17.10%

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Research

Research Alert: CFRA Maintains Hold Opinion On Shares Of Advance Auto Parts Inc.

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:We lower our 12-month target by $5 to $65, based on a FY 27 P/E of 15.3x, a justified discount to AAP's 10-year mean forward P/E of 19.7x. Following AAP's stronger-than-expected Q1 earnings, we are raising our estimates but reducing our price target and maintaining a Hold. We increase our adjusted EPS estimates to $3.30 from $2.80 for FY 26 and to $4.25 from $4.15 for FY 27. AAP's strong earnings were consistent with the results we've seen from other aftermarket retailers, which indicated a much stronger-than-expected demand environment to start the year. Same store sales are coming in well above expectations, which we think is partially due to the record-high average U.S. vehicle age as well as strong used vehicle demand (i.e., vehicles in need of more frequent maintenance and repairs), noting that U.S. used vehicle inventories hit a record low in March. In turn, AAP's sales have led to improved fixed cost absorption and a significant margin beat, demonstrating the business model's operating leverage.

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Research

Research Alert: Advance Auto Parts: Q1 Well Ahead Of Expectations; 2026 Guidance Maintained

CFRA, an independent research provider, has providedwith the following research alert. Analysts at CFRA have summarized their opinion as follows:Advance Auto Parts (AAP) posted Q1 adjusted EPS of $0.77 vs. -$0.22, well ahead of the $0.43 consensus. The beat was attributable to stronger-than-expected sales and margins, as revenue rose 1.2% to $2.61B ($40M ahead of consensus) on a 3.5% increase in same-store-sales (140 bps ahead of consensus), which was AAP's strongest growth rate in five years. Gross margin expanded 220 bps to 45.1% (40 bps above consensus), owing to merchandising initiatives and cycling past headwinds. The company maintained 2026 adjusted EPS guidance of $2.40-$3.10, the midpoint ($2.75) of which is slightly short of the current consensus of $2.80 and up from the $2.26 earned in 2025. AAP shares are currently trading 9% higher in the pre-market. Recent results from other aftermarket retailers have indicated a much stronger-than-expected demand environment to start the year, with SSS coming in well above expectations, which we think is partially due to strong used vehicle demand (U.S. inventory days' supply hit a record low in March).

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Stocks Down Pre-Bell as Traders Monitor US-Iran Developments, Parse Nvidia Earnings
US Markets

Stocks Down Pre-Bell as Traders Monitor US-Iran Developments, Parse Nvidia Earnings

US equity markets were trending lower before the opening bell Thursday as traders monitor the latest developments in the US-Iran conflict and digest tech bellwether Nvidia's (NVDA) quarterly earnings.The S&P 500 fell 0.4% and the Dow Jones Industrial Average slipped 0.3% in premarket activity, while the Nasdaq was down 0.5%. The indexes finished the previous trading session higher, with the Nasdaq and S&P 500 snapping a three-day losing streak.Iranian Foreign Ministry spokesperson Esmaeil Baghaei said Thursday that Tehran is reviewing the latest US proposal to end the war in the Middle East, CNBC reported, citing state-run agency Nour News.President Donald Trump told reporters on Wednesday that negotiations with Iran had reached the final stages, though he warned of further attacks if Tehran backs out, according to several media outlets. "We'll either have a deal or we're going to do some things that are a little bit nasty," Trump said, according to a Bloomberg News report. "But hopefully that won't happen."Earlier on Wednesday, Iran's Islamic Revolutionary Guard Corps reportedly said that it would retaliate beyond the Middle East if the US or Israel resumed their military attacks against the country.West Texas Intermediate crude oil slipped 0.2% to $98.01 a barrel before the open, while Brent decreased 0.6% to $104.42.Shares of Nvidia (NVDA) slipped 0.2% pre-bell after the chipmaking giant reported fiscal first-quarter revenue above Wall Street's estimates, as data center sales outperformed expectations amid an artificial intelligence boom. For the current quarter, Nvidia said it anticipates revenue of $91 billion, plus or minus 2%.Intuit's (INTU) stock dropped 14% after the financial technology platform reported better-than-expected fiscal third-quarter results and disclosed plans to reduce its workforce by about 17%. Urban Outfitters (URBN) declined 1.4% after its financial results.Federal Reserve officials flagged the possibility of higher interest rates if the Middle East conflict drags on and keeps inflation above the 2% goal, minutes from the central bank's April meeting showed on Wednesday.Meeting participants generally determined that elevated inflation, combined with uncertainty around the duration and impact of the Iran war, could justify holding rates for longer than previously anticipated. However, majority of Fed officials pointed out that "some policy firming would likely become appropriate if inflation were to continue to run persistently above 2%."Treasury yields were rising before the open, with the two-year rate gaining 6.6 basis points to 4.1% and the 10-year rate adding 5.1 basis points to 4.62%.Thursday's economic calendar has the housing starts and permits report for April at 8:30 am ET, along with the weekly jobless claims bulletin and the Philadelphia Fed manufacturing index for May. The S&P Global's (SPGI) flash purchasing managers' index for May is out at 9:45 am, followed by the Kansas City Fed manufacturing index for the same month at 11 am.Richmond Fed President Thomas Barkin is scheduled to speak at 12:20 pm.Walmart (WMT), Deere (DE), NetEase (NTES), Williams-Sonoma (WSM), Ralph Lauren (RL), Nio (NIO) and Advance Auto Parts (AAP) report their latest financial results before the bell, among others. Ross Stores (ROST), Take-Two Interactive Software (TTWO), Workday (WDAY), Zoom Communications (ZM) and Deckers Outdoor (DECK) release their earnings after the markets close.Gold was down 0.4% at $4,519 per troy ounce, while bitcoin fell 0.3% to $77,255.

Dow JonesNasdaq CompositeS&P 500$AAP$DE$DECK$INTU$NIO$NTES$NVDA$RL$ROST$SPGI$TTWO$URBN$WDAY$WMT$WSM$ZM
Wire

Advance Auto Parts Likely to Face Margin Pressure From Inflation, High Gas Prices, RBC Says

Advance Auto Parts (AAP) could post modest Q1 comparable sales growth supported by favorable weather and industry demand trends, though "tougher" inflation comparisons and higher gas prices may pressure margins and earnings, RBC Capital Markets said in a note Tuesday.The firm forecasts Q1 comparable sales growth of 2%, slightly above the 1.9% consensus estimate, while adjusted operating margin is projected to rise 250 basis points year over year to 2.2%, below the 2.6% consensus. Adjusted earnings per share are expected at $0.31, compared with consensus expectations of $0.43, analysts said.RBC expects Q2 comparable sales growth of 2%, operating margin of 4.7% and adjusted earnings per share of $0.85, while anticipating management to reaffirm 2026 guidance.Many of the company's sales and margin initiatives are beginning to show "promise," but the firm said it remains "cautiously optimistic" about management's efforts to recapture market share and reduce costs.RBC lowered its price target to $62 from $63, supporting its sector perform rating on the stock.Price: $51.64, Change: $-0.19, Percent Change: -0.37%

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