AAP Stock Forecast & Price Target

Advance Auto Parts is supported by a resilient professional channel that outperformed the weaker DIY business, with Pro comp growth remaining positive while DIY posted low-single-digit declines. The company’s operating model is also showing leverage, as adjusted gross margin reached 46.2% and operating margin expanded to 5.6% in 2Q, helped by merchandising initiatives, labor productivity, and a $26 million tariff refund that added about $0.31 to EPS. Even with 2H26 implied below consensus on margins, management still reiterated +1.0% to +2.0% comp sales guidance, expects gross margin in the 44%-45% range, and sees continued benefits from store and hub openings, a completed DC consolidation, and lower national-account drag.

Advance Auto Parts is facing a difficult turnaround because weak comps, especially in DIY and lower-end customer segments, suggest demand remains pressured even after some 3Q improvement. The company’s margins are also under scrutiny: excluding $26 million of tariff refunds, 2Q gross margin would have been about 44.9%, EBIT margin roughly 4.3%, and EPS around $0.72, leaving little room for confidence given deleverage, mix shift, and higher fuel and supply-chain costs. After shares rose 44% YTD and now trade around 17.5x, the valuation already reflects optimism that a long-awaited margin recovery and share gains have yet to prove durable.