Industry Overview - The Zacks Automotive - Retail and Wholesale - Parts industry is currently facing challenges, with expectations of cooling vehicle sales as electric vehicle (EV) incentives expire and high prices deter buyers, impacting demand for parts and accessories [1][4] - The industry includes retailing, distribution, and installation of vehicle parts and accessories, with consumers having the option to repair vehicles themselves (DIY) or seek professional services (DIFM) [3] Factors Impacting the Industry - Vehicle sales are expected to soften due to high prices and cooling EV demand, which may lead to a decline in auto parts and accessories demand [4] - The complexity of modern vehicles is shifting repairs from DIY consumers to professional service providers, shrinking the DIY segment while expanding the DIFM side [5] - High capital demands for electrification and digital transformation are straining profitability, requiring significant investment in new technologies and distribution networks [6] - The aging U.S. vehicle fleet, with an average age of 12.8 years, is driving steady demand for replacement parts and maintenance, benefiting the aftermarket [7] Industry Performance and Valuation - The Zacks Auto Retail & Wholesale Parts industry ranks 184, placing it in the bottom 24% of 245 Zacks industries, indicating subdued near-term prospects [8][10] - Over the past year, the industry has underperformed compared to the Auto, Tires, and Truck sector and the S&P 500, with a growth of 15.5% versus the S&P 500's 16.2% and the sector's 48.1% [11] - The industry is currently trading at an EV/EBITDA ratio of 28.47X, higher than the S&P 500's 18.49X and the sector's 23.41X, reflecting the high capital demands and debt levels [14] Company Highlights - O'Reilly Automotive has achieved 32 consecutive years of record revenue growth, driven by aggressive store expansion and a strong distribution network, with plans to enhance inventory levels [19] - O'Reilly's Zacks Consensus Estimate for 2025 EPS and sales indicates year-over-year growth of 8% and 6%, respectively, with further growth projected for 2026 [20] - Advance Auto Parts has strengthened its liquidity through the sale of its Worldpac business for $1.5 billion, allowing a renewed focus on core operations and efficiency improvements [23] - Advance Auto's Zacks Consensus Estimate for 2025 EPS implies a significant year-over-year growth of 725%, with continued growth expected in 2026 [24]