Abstract

Advance Auto Parts will report first‑quarter 2026 results Pre‑Market on May 21, 2026, and this preview compiles current-quarter forecasts, a concise review of last quarter’s performance, and the latest institutional views shaping near‑term expectations.

Market Forecast

Current-quarter projections point to revenue of approximately 2.58 billion US dollars, up 3.21% year over year, with adjusted EPS estimated around 0.46, up 156.30% year over year; EBIT is projected near 72.44 million US dollars, implying 244.29% year-over-year growth. Margin guidance for the quarter is not explicitly indicated by the company forecasts, so the consensus focus centers on volume, mix, and cost actions that inform the outlook for profitability and cash generation.

Within the product mix, the company-reported breakdown highlights Parts and Batteries as the largest revenue contributor at 5.50 billion US dollars, providing the core base for both commercial and do‑it‑yourself demand tied to maintenance and replacement cycles. Accessories and Chemicals, at 1.81 billion US dollars, remains the category with the clearest attach‑rate opportunity to transactions and ticket growth; year‑over‑year growth by segment was not disclosed.

Last Quarter Review

In the previous quarter, Advance Auto Parts delivered revenue of 1.97 billion US dollars (down 1.15% year over year), a gross profit margin of 44.04%, GAAP net profit attributable to shareholders of 6.00 million US dollars (net profit margin 0.30%), and adjusted EPS of 0.86 (up 172.88% year over year).

A key financial highlight was EBIT of 73.00 million US dollars, up 173.41% year over year, supported by ongoing cost initiatives and early signs of operating leverage. On the commercial and retail product side, the mix remained anchored by Parts and Batteries at 5.50 billion US dollars in the company’s product breakdown, with segment-level year-over-year dynamics not disclosed; management’s operational focus continues to prioritize availability, fill rates, and competitive value to improve conversion and loyalty.

Current Quarter Outlook

Main business: Parts and Batteries

The performance of Parts and Batteries is set to shape the quarter’s top line and profit conversion, given its size in the company’s revenue mix and its integral role in both professional and consumer channels. Management initiatives around merchandising, availability, and supply chain execution aim to reduce out‑of‑stocks and improve fill rates, a prerequisite for sustained comparable sales and for recovering share where service levels previously lagged. In the near term, pricing cadence and mix within core maintenance categories will be critical to protecting gross margin while keeping value messaging credible versus peers.

Operationally, store‑level execution and commercial account engagement are focal points for raising order conversion in higher‑value repair jobs and increasing ticket size on the consumer side. The company has emphasized process improvements designed to tighten inventory positioning—especially in fast‑moving SKUs—and to shorten cycle times from distribution centers to stores and to commercial customers. If these steps translate into higher on‑shelf availability, the segment can better leverage fixed costs and contribute to EBIT progression even if headline demand stays modest. The prior quarter’s 44.04% gross margin sets a reference point; to extend margin gains this quarter, management needs improved mix, stable promotions, and procurement savings to offset pressure from wage inflation and competitive price investments.

Most promising segment: Accessories and Chemicals

Accessories and Chemicals offers a clear attach‑rate opportunity to core tickets and is often a lever for gross margin support when promotional intensity is balanced with targeted mix. This category includes car care, chemicals, and related add‑ons that can raise average ticket when store associates or digital prompts suggest the right products at checkout. The segment’s relatively favorable margin profile compared with some hard parts positions it as an avenue to buttress profitability if volume in core repairs grows only gradually.

Execution will hinge on in‑aisle resets, planogram discipline, and presentation that emphasizes private‑label and preferred vendor offerings where economics are stronger. Digital merchandising and search optimization for commercial and retail customers can elevate discovery and cross‑sell, particularly when tied to vehicle‑specific recommendations and seasonal campaigns. With Accessories and Chemicals contributing 1.81 billion US dollars in the company’s revenue mix, management can use targeted promotions, loyalty incentives, and improved availability to drive share of wallet; year‑over‑year growth figures for the segment were not disclosed, but a better attachment strategy should reinforce gross margin resiliency even if traffic is uneven.

Stock price drivers this quarter

Profit trajectory will be the dominant stock driver, as investors weigh whether gross margin can remain stable-to‑improving while SG&A efficiency progresses. The forecasted step‑up in earnings power—adjusted EPS projected around 0.46, up 156.30% year over year, and EBIT around 72.44 million US dollars—places scrutiny on whether cost savings, supply chain simplification, and store‑level initiatives are translating into durable operating margin improvement. Any signs that the company can sustain sequential gains in operating margin will likely carry more weight than small variances in headline sales.

Comparable sales trends will also matter, especially in the professional channel where higher‑value repairs can move the mix. Indications from external previews suggest modest comparable growth, with attention to how seasonal factors and gas prices influence discretionary categories versus nondiscretionary maintenance. A balanced price/mix strategy that protects share without eroding gross margin is essential; investors will parse commentary for the elasticity of parts categories and whether vendor negotiations or private‑label penetration can absorb pricing headwinds.

Cash conversion and working capital discipline remain under the microscope, given historical pressure on free cash flow during transitions. Investors will track inventory days, the cadence of inventory rightsizing, and capital allocation signals. Clear evidence of tighter working capital, even amid product availability improvements, would bolster confidence in near‑term cash generation. Finally, management’s qualitative color on the cadence of margin initiatives across merchandising, distribution, and store operations will shape expectations for the second quarter and beyond.

Analyst Opinions

Across recent institutional commentary since January, cautious or neutral views dominate, with a clear tilt toward guarded expectations on near‑term profitability. Based on the compiled notes, cautious/neutral stances outnumber bullish calls by a wide margin (bearish/cautious: 8; bullish: 0). Multiple firms reiterate Hold or equivalent ratings, citing ongoing execution needs and a measured outlook on margin progression despite early signs of stabilization.

- RBC Capital Markets expects modest comparable growth but highlights pressures from inflation and gas prices on earnings and margins. In its preview, RBC projected first‑quarter comparable sales growth near 2%, an adjusted operating margin near 2.2%, and adjusted EPS around 0.31—below a higher street view—framing the company’s near‑term profitability as still in recovery. The takeaway is “cautiously optimistic” on initiatives, yet guarded on how quickly they will flow through to the P&L.

- Morgan Stanley maintains an equalweight stance, noting that margins appear to be stabilizing and that a path toward a roughly 5% EBIT margin is achievable if merchandising, supply chain simplification, and store‑level improvements continue to deliver. The firm underscores that upside remains constrained without steadier comparable sales momentum, reinforcing that investors should look for consistent operational execution as the primary catalyst for re‑rating.

- Truist maintains Hold and recently trimmed its price target to 55 US dollars from prior levels, indicating that while strategic steps are constructive, visibility into margin recapture remains limited. UBS and D.A. Davidson also maintain neutral views, pointing to modest top‑line growth and ongoing constraints on margins, with expectations for gradual progress rather than a rapid inflection. William Blair and TD Cowen echo the execution‑risk narrative, with TD Cowen highlighting slower margin progress and soft top‑line trends as reasons to stay on the sidelines.

In aggregate, the majority opinion anticipates a quarter that should show incremental improvement yet still reflect the rebuilding phase of the company’s operations. Analysts are watching for a few critical confirmations: that comparable sales are positive and stabilizing, that gross margin holds its ground without excessive promotional leakage, and that SG&A efficiency continues to improve through process and mix—not one‑time actions. They also want clarity on the durability of profit gains into the second quarter, given early seasonal boosts may not persist if gas prices remain elevated or if discretionary categories underperform.

The cautious majority’s analytic framework can be summarized in three tests. First, can availability and service metrics keep improving enough to support ticket growth in core categories without pressuring price? Second, will the company sustain sequential operating margin gains that align with the strong year‑over‑year projections for EBIT and EPS (244.29% and 156.30%, respectively), thereby validating that cost takeout and merchandising actions are compounding? Third, will cash conversion improve as inventory positioning normalizes, creating room for reinvestment and balance sheet strengthening? Meeting or exceeding these tests would help shift sentiment from Hold toward more constructive views over time; missing them would reinforce the prevailing caution.