Is It Time To Reconsider Advance Auto Parts (AAP) After Its Recent Share Price Rebound

Simply Wall St

Sun, February 15, 2026 at 12:10 AM GMT+9 6 min read

In this article:

AAP

+1.08%

Make better investment decisions with Simply Wall St’s easy, visual tools that give you a competitive edge.

If you are wondering whether Advance Auto Parts stock is starting to look interesting on value, the recent share price moves give you a fresh set of numbers to work with.

The stock last closed at US$58.85, with returns of 6.4% over 7 days, 37.2% over 30 days, 51.3% year to date and 25.8% over 1 year, alongside 3 year and 5 year returns of 58.0% and 60.1% declines respectively.

Recent news coverage has focused on the company as an established player in the US auto parts retail space, with investors watching how it responds to competition and changing customer habits. Commentary has also highlighted how the share price history, including those longer term declines, frames the current interest in its valuation.

Simply Wall St currently assigns Advance Auto Parts a valuation score of 4 out of 6, based on how often it screens as undervalued on several checks. This sets us up to compare different valuation approaches next and then look at one more way to think about what the stock might be worth.

Advance Auto Parts delivered 25.8% returns over the last year. See how this stacks up to the rest of the Specialty Retail industry.

Approach 1: Advance Auto Parts Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow, or DCF, model takes expected future cash flows, discounts them back to today using a required return, and adds them up to estimate what the business might be worth per share right now.

For Advance Auto Parts, the model used is a 2 Stage Free Cash Flow to Equity approach based on cash flow projections. The latest twelve month free cash flow is a loss of $398.6 million. From there, analysts and extrapolated estimates point to free cash flow reaching $2.2 billion in 2035, with ten year projections ranging from $75.7 million in 2026 to $2.2 billion in 2035, all in dollars.

When those forecast cash flows are discounted back and combined, Simply Wall St arrives at an estimated intrinsic value of $227.17 per share. Compared with the recent share price of $58.85, this DCF output implies the shares trade at a 74.1% discount, which the model interprets as meaningfully undervalued on these assumptions.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Advance Auto Parts is undervalued by 74.1%. Track this in your watchlist or portfolio, or discover 53 more high quality undervalued stocks.

AAP Discounted Cash Flow as at Feb 2026

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Advance Auto Parts.

繼續閱讀  

Approach 2: Advance Auto Parts Price vs Sales

For companies where profitability is mixed or earnings are not the cleanest guide, the P/S ratio can be a useful way to compare what investors are paying for each dollar of revenue. It sidesteps short term earnings swings and focuses on the top line, while still reflecting growth expectations and business risk in the multiple.

Higher growth and lower perceived risk generally support a higher P/S ratio, while slower growth or higher risk usually point to a lower, more conservative multiple. Advance Auto Parts currently trades on a P/S of 0.41x. That sits below the Specialty Retail industry average of 0.46x and above the peer average of 0.19x, so the simple read across is a mixed signal.

Simply Wall St’s Fair Ratio for the stock is 0.56x. This is a proprietary estimate of what the P/S ratio could be given factors such as earnings growth, profit margins, industry, market cap and specific risks. Because it adjusts for these company level traits, it aims to be more tailored than a basic peer or industry comparison. With the Fair Ratio of 0.56x above the current 0.41x, this framework suggests the shares screen as undervalued on P/S.

Result: UNDERVALUED

NYSE:AAP P/S Ratio as at Feb 2026

P/S ratios tell one story, but what if the real opportunity lies elsewhere? Start investing in legacies, not executives. Discover our 23 top founder-led companies.

Upgrade Your Decision Making: Choose your Advance Auto Parts Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simple stories you build around a company that tie your view of its future revenue, earnings and margins to a forecast and then to a fair value. All of this happens within an easy tool on Simply Wall St’s Community page that compares your Fair Value to the current share price, updates automatically when new news or earnings arrive, and can look very different from one investor to the next. For example, someone who thinks Advance Auto Parts is worth US$65.00 per share based on assumptions like a 2.29% revenue growth rate, a 4.02% profit margin and a 14.91x future P/E will have a very different Narrative to another investor who anchors on a fair value near US$34.51 using a 0.36% revenue growth rate, a 3.42% profit margin and a 9.89x future P/E.

For Advance Auto Parts, here are previews of two leading Advance Auto Parts Narratives:

🐂 Advance Auto Parts Bull Case

Fair value: US$65.00 per share

Implied pricing gap vs last close: about 9.5% below this fair value

Assumed revenue growth: 2.29% per year

Assumes steady revenue growth and a move from a loss today to US$567.4m in earnings by around July 2028, with profit margins rising to 6.2%.

Sees automation, supply chain consolidation into 12 mega distribution centers and store expansion in core markets as key levers for better margins and cash generation.

Builds in upside from private label brands like ARGOS, a growing Pro channel and an aging vehicle fleet, while still flagging risks from electric vehicles, e commerce pressure and ongoing supply chain work.

🐻 Advance Auto Parts Bear Case

Fair value: US$51.29 per share

Implied pricing gap vs last close: about 14.8% above this fair value

Assumed revenue growth: 1.77% per year

Assumes revenue edges up modestly and earnings reach US$295.3m by around September 2028, with profit margins lifting to 3.13%.

Credits the 3 year plan, distribution consolidation and vendor partnerships for improving efficiency, but expects only measured upside while store closures and asset optimization flow through.

Highlights execution costs, weaker recent sales trends and macro pressures on customers as headwinds that could keep the stock closer to this lower fair value range.

Taken together, these Narratives frame a fairly wide band of possible outcomes, from around US$51 per share on the cautious side to US$65 on the more optimistic side. If you want to test your own assumptions about revenue, margins and the right P/E for Advance Auto Parts, building your own Narrative can help you see exactly where you agree or disagree with these starting points.

Do you think there’s more to the story for Advance Auto Parts? Head over to our Community to see what others are saying!

NYSE:AAP 1-Year Stock Price Chart

_ This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned._

Companies discussed in this article include AAP.

Have feedback on this article? Concerned about the content? Get in touch with us directly._ Alternatively, email editorial-team@simplywallst.com_

條款 及 私隱政策

Privacy Dashboard

More Info