With a market cap of $8.6 billion, LKQ Corporation (LKQ) is a global distributor of replacement parts, components, and systems for vehicle repair and maintenance, serving collision and mechanical repair shops, dealerships, and retail customers. It operates across North America and Europe through four segments: Wholesale–North America, Europe, Specialty, and Self Service. The Antioch, Tennessee-based is expected to announce its fiscal Q4 2025 results soon. Ahead of this event, analysts forecast LKQ to rep ...

Industry Overview - The Zacks Automotive - Retail and Wholesale - Parts industry involves retailing, distribution, and installation of vehicle parts and accessories, with options for consumers to choose between DIY and DIFM services [2] - The industry is highly competitive and is undergoing significant changes due to evolving customer expectations and technological innovations [2] Key Growth Drivers - The average age of vehicles in the U.S. has reached a record high of 12.6 years, increasing demand for auto parts as older vehicles require more maintenance [3] - Modern vehicles are becoming more complex, leading consumers to prefer professional repair services, thus boosting the DIFM segment [4] - Auto parts dealers are expanding through acquisitions and digital platforms, enhancing market presence and operational efficiency [5] Electric Vehicle Market Impact - U.S. EV sales reached a record 607,089 units in the first half of 2025, marking a 1.5% year-over-year increase, which is expected to provide a boost to auto parts retailers, especially those with EV-specific components [6] Industry Performance - The Zacks Auto Retail & Wholesale Parts industry ranks 63, placing it in the top 26% of 245 Zacks industries, indicating solid near-term prospects [7][8] - Over the past year, the industry has outperformed both the Auto, Tires and Truck sector and the S&P 500, with a growth of 17% compared to the S&P 500's 13% [10] Valuation Metrics - The industry is currently trading at an EV/EBITDA ratio of 27.27X, higher than the S&P 500's 17.7X and the sector's 21.01X [13] - The industry's EV/EBITDA ratio has fluctuated between 21.41X and 28.32X over the past five years, with a median of 24.67X [14] Company Highlights - **Advance Auto Parts (AAP)**: Focuses on selling replacement parts and has bolstered liquidity through the sale of its Worldpac business for $1.5 billion. The company aims to streamline operations and reduce costs through supply chain consolidation [18] - Advance Auto carries a Zacks Rank 2 (Buy), with a projected EPS growth of 752% year-over-year for 2025 [19] - **O'Reilly Automotive (ORLY)**: A leading player in the aftermarket auto parts space, known for 32 consecutive years of revenue growth. The company plans to increase inventory levels and has committed to share repurchases totaling $2.08 billion in 2024 [22] - O'Reilly Automotive holds a Zacks Rank 3 (Hold), with projected EPS growth of 5.4% for 2025 [23]