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Advance Auto Parts (NYSE:AAP) Q4 2025 Earnings call February 13, 2026 08:00 AM ET Company ParticipantsBret Jordan - Managing DirectorLavesh Hemnani - VP and Head of Investor RelationsMark Jordan - VP of Equity ResearchRyan Grimsland - EVP and CFOShane O'Kelly - President and CEOConference Call ParticipantsChris Horvers - Senior AnalystScot Ciccarelli - Managing Director and Senior Equity Research AnalystSeth Sigman - Managing Director and Senior Equity Research AnalystSimeon Gutman - AnalystZach Fadem - Man ...

Advance Auto Parts (NYSE: AAP) will release its fourth-quarter earnings in a couple of days, and investors appear to be getting excited ahead of them. The stock rose another 5.4% today, and is up a remarkable 51.9% in 2026 alone. Advance Auto Parts, a deep value stock for 2026 I discussed the stock earlier this year and highlighted its deep value opportunity it which still exists today. Simply put, the company's operational metrics are so far behind peers like O'Reilly Automotive and AutoZone that all it w ...

MEMPHIS, Tenn., Feb. 10, 2026 (GLOBE NEWSWIRE) -- AutoZone, Inc. (NYSE: AZO), the leading retailer and distributor of automotive replacement parts and accessories in the Americas, will release results for its second quarter ended Saturday, February 14, 2026, before market open on Tuesday, March 3, 2026. Additionally, the Company will host a one-hour conference call on Tuesday, March 3, 2026, beginning at 10:00 a.m. (ET), to discuss the results of the quarter. This call is being webcast and can be accessed, ...

Group 1: AutoZone's Success - AutoZone has increased its earnings per share by 21 times since 2005, with its share price rising 42 times during the same period [6][8] - The company effectively utilized its steady cash flow for share buybacks, averaging 120% of its annual income allocated to this purpose [7][8] - AutoZone bought back 80% of its outstanding shares in 2005, leading to significant growth in earnings and share price [8] Group 2: UK Market Dynamics - The UK market is characterized by persistently low valuations due to slow adoption of global best practices in capital allocation by publicly listed companies [2][3] - Many UK companies prioritize dividends over share buybacks, which can be more effective in enhancing shareholder value, especially in a high-yield environment [3][4] - UK active fund managers have experienced nine consecutive years of outflows, making dividends a crucial lifeline for managing these outflows [4] Group 3: Potential for Change in the UK - The UK equity market is seen as being in a slow liquidation state, but such environments can present exceptional long-term investment opportunities [5] - There is a parallel with Japan, where outdated governance practices led to low valuations, but recent activist engagements have spurred share buybacks and market revival [11][12] - The UK is undergoing changes in governance and capital allocation practices, with recent activist cases leading to board resignations and shifts in management focus [13][14] Group 4: Future Investment Opportunities - A new UK-listed company has been identified as a potential investment opportunity, with plans to return substantial capital to shareholders and a transition to a capital-light model [18][21] - This company has lost 50% of its value from its peak but could trade at 3 times earnings if recovery unfolds as expected [21] - The timing of the investment opportunity is critical, with meaningful catalysts expected in March/April 2026 that could lead to a significant stock recovery [19]

Core Viewpoint - Advance Auto Parts is experiencing a positive market response, with its stock price increasing by 5.2% today and over 28% year-to-date, indicating a growing interest in its value proposition [1]. Group 1: Company Performance - The investment case for Advance Auto Parts hinges on the expectation that management can enhance operational performance to align more closely with competitors like AutoZone and O'Reilly Automotive [2]. - The company's EBITDA margin is significantly lower than its peers, contributing to its low price-to-sales ratio [2]. Group 2: Market Outlook - The overall market outlook for the auto aftermarket is weak, as indicated by 3M's forecast for 2026; however, the situation is viewed as a self-help opportunity for Advance Auto Parts [3]. - CEO Shane O'Kelly's strategic restructuring efforts are seen as a potential catalyst for improving profit margins and unlocking considerable upside for the stock [3]. Group 3: Strategic Initiatives - O'Kelly's restructuring plan includes the closure of over 700 locations and the opening of new stores in strategic areas where Advance Auto has a competitive advantage [4]. - The introduction of larger market hub stores aims to address inventory management challenges, enabling same-day availability of parts for customers [4]. - A new loyalty program targeting DIY customers has been launched, aimed at enhancing customer retention and loyalty [5]. Group 4: Investment Considerations - Despite the positive developments, Advance Auto Parts was not included in a recent list of the top 10 stocks recommended for investment, suggesting a cautious approach for potential investors [6].

Upgrades Summary - Susquehanna upgraded Arm (ARM) to Positive from Neutral with an unchanged price target of $150, citing recent downgrades from competitors and significant underperformance as an "excellent setup" for investors [2] - BNP Paribas upgraded Seagate (STX) to Outperform from Neutral with a price target of $380, expressing greater conviction that "robust" data center storage demand could lead to a longer upcycle than initially expected [2] - Raymond James upgraded Ulta Beauty (ULTA) to Strong Buy from Outperform with a price target increase to $790 from $605, anticipating "outsized growth" in fiscal 2026 following heavy investments [2] - Northcoast upgraded Advance Auto Parts (AAP) to Buy from Neutral with a price target of $55, highlighting "healthy" demand trends and performance improvements into 2026, along with a strategic decision to sell Worldpac and focus on core retail [2] - BofA upgraded Oklo (OKLO) to Buy from Neutral with a price target raised to $127 from $111, following a binding agreement with Meta (META) to develop a phased 1.2 GW advanced nuclear campus [2]

Group 1 - AutoZone, Inc. (NYSE:AZO) has experienced a decline in its price-to-earnings ratio to around 23, despite maintaining good earnings and growth [1] - The stock's recent performance was impacted by an inconsistent earnings report, leading to a significant sell-off, but the company is expected to recover in the next quarter [1] - AutoZone has reduced its share count by 44.9% since the end of 2015 and approximately 89% since summer 1998, contributing to its status as a long-term outperformer [2] Group 2 - The current high interest rates make financing for new cars expensive, prompting consumers to seek replacement parts for their existing vehicles [2] - AutoZone's stock has pulled back 22% from its recent highs, presenting a potential buying opportunity [2]

Core Insights - AutoZone, Inc. (AZO) is a prominent retailer and distributor of automotive parts, recognized for its extensive storefront presence and strong brand identity [1] Company Overview - The company has significantly benefited from the growing demand in the automotive parts sector, indicating a robust market position [1] Industry Context - The automotive parts retail industry is experiencing an upward trend, which is advantageous for companies like AutoZone [1]

Core Viewpoint - AutoZone, while not in the spotlight of current technological trends, demonstrates strong long-term performance and growth potential, making it a noteworthy investment opportunity [1]. Financial Performance - AutoZone's stock has underperformed compared to the S&P 500 over the past one and three years, with increases of 3% and 39% respectively, while the S&P 500 has seen double-digit returns [3]. - The stock has declined 21% from its all-time high of $4,354.54 reached in September, following disappointing financial results for Q1 of fiscal 2026, which ended on November 22 [4]. - Same-store sales increased by 5.5% year-over-year, and the company opened 53 net new stores during this period [4]. - Gross margin was negatively impacted by inflationary pressures on inventory, leading to a 6.8% decrease in operating income compared to Q1 2025 [5]. - Over the last five years, AutoZone's shares have increased by 201%, significantly outperforming the S&P 500, which would have doubled an initial investment [5]. Market Position and Growth Strategy - AutoZone's current market capitalization is $57 billion, with a stock price of $3,445.71 and a price-to-earnings ratio of 23, indicating potential attractiveness for investors [6][10]. - The company has shown consistent revenue growth, with a compound annual growth rate of 6.4% from fiscal 2015 to fiscal 2025, without any down years [8]. - Management plans to aggressively open new locations, indicating ongoing expansion opportunities [8]. Business Model and Profitability - AutoZone operates in the aftermarket auto parts sector, which maintains steady demand regardless of economic conditions, reducing investment risk [9]. - The company reported $2.5 billion in net income and $1.8 billion in free cash flow for fiscal 2025, showcasing strong profitability [9]. - AutoZone has effectively reduced its diluted outstanding share count by 13% over the past three years through stock buybacks [9].