Overview
Truist Securities has increased its price objective for Advance Auto Parts (NYSE:AAP) to $57 from $48 while maintaining a Hold recommendation. The upgraded target sits close to the companys recent market price of $56.60, after shares have risen roughly 50.63% so far this year. InvestingPro data cited by analysts indicates the stocks relative strength index is in overbought territory.
Quarterly results and margin performance
Truist noted that comparable sales for the fourth quarter were weaker than the firm had estimated, yet Advance Auto Parts sustained a positive comparable sales trend and delivered stronger margins. Those margin improvements contributed to earnings per share that exceeded Truists expectations.
On a full-year basis the company reported overall revenue of $8.6 billion and achieved a gross profit margin of 43.87%. The company has been profitable over the trailing twelve months, a point highlighted by Truist as part of its reassessment of the stocks near-term outlook.
Outlook and guidance
Advance Auto Parts introduced 2026 guidance that incorporates roughly 170 basis points of operating income expansion at the midpoint, taking the operating margin to approximately 4.2%. Before the quarter, Truist had been modelling a 3.5% operating income level for the company.
The company also revised its framing of a prior 2027 target. The earlier goal of a 7% operating margin in 2027 was reclassified as a medium-term aspiration. Management indicated it could achieve an additional 100 basis points of operating income expansion in 2027, which would imply an operating margin near 5.2% under the companys current assumptions.
Liquidity and shareholder returns
Advance Auto Parts reported a current ratio of 1.75, reflecting the companys short-term liquidity position. The company has also maintained dividend payments for 21 consecutive years, with the current dividend yielding 1.7%.
Valuation metrics and analyst commentary
Truist observed that much of the anticipated operational improvement appears to be priced into the stock, noting the shares trade at roughly 20 times earnings per share under its framework and that considerable execution remains necessary. InvestingPro data quoted in coverage shows a market price-to-earnings ratio of 51.07 and an EV/EBITDA multiple of 12.75, reflecting a relatively high earnings multiple by those measures.
Other analyst moves and recent earnings
Advance Auto Parts fourth-quarter 2025 results included an earnings per share beat, with EPS of $0.86 compared with consensus expectations of $0.43, a 100% surprise. Quarterly revenue was $2 billion versus a forecast of $1.95 billion.
Following the earnings release, several brokerages adjusted their targets. RBC Capital increased its price target to $63 from $57 while retaining a Sector Perform rating; the firm lowered its first-quarter sales and EPS estimates but pointed to margin progress. DA Davidson raised its target to $58 from $47 and maintained a Neutral rating, while noting that a 7% operating margin by 2027 remains challenging in current conditions. These actions reflect continued analyst reassessment of the companys financial trajectory and strategic targets.
Context for investors
Truists move to lift the price target reflects a recognition of stronger margin performance in the most recent quarter, balanced against softer comparable sales and elevated valuation multiples. The companys updated guidance for 2026 and the reframing of the 2027 margin objective provide explicit targets for monitoring execution, while liquidity and dividend continuity are additional factors for investors to weigh.
Key figures and metrics referenced in this report were provided by Truist and InvestingPro and reflect the companys published results and analyst commentary.