Why Advance Auto Parts stock spiked 57%

Advance Auto Parts (NYSE:AAP) stock was having a record day on Thursday, rising a ridiculous 57% to $49 per share.

The catalyst was the first quarter earnings report, which beat estimates in a difficult environment. In addition, the company maintained its guidance, which investors may have found promising, given the potential impact of tariffs.

Let’s look at the numbers. Advance Auto Parts saw net sales of $2.58 billion in the quarter, which was down 7% year-over-year. However, it topped Wall Street estimates of $2.51 billion. The lower year-over-year total reflects the company’s sale of its wholesale auto parts distributor business Worldpac last November, as well as some store closures.

The Worldpac selloff, part of the company’s strategic reorganization, also impacts its earnings numbers. The company generated net income of $24 million in the quarter, down from $40 million in the same quarter a year ago. But when you take out net income from the discontinued operations, earnings rose 38% to 40 cents per share.

When you subtract one-time adjustments, the company had an adjusted net loss of 22 cents per share. That was far better than expectations of a 69 cents per share net loss.

“The Advance team delivered better than expected sales and profitability in the first quarter and I want to thank them for their hard work and commitment to serving our customers. During the quarter, we also successfully completed our store footprint optimization within an accelerated timeframe, while continuing to make progress on our other strategic initiatives,” Shane O’Kelly, president and CEO, said.

The 57% spike in price Thursday was a one-day record for the stock, according to Morningstar.

Dealing with tariffs

In addition to the sale of Worldpac, the company has also undergone a review of its stores, which has resulted in the closing underperforming stores. Advance Auto parts completed the footprint optimization in late March and now 75% of its stores are in markets where it ranks No. 1 of No. 2 in market share.

Now the next phase of the reorganization begins, as the company plans to open 30 new stores this year and an additional 100 stores by 2027. So far, the company has opened six stores in 2025 in Florida, New Jersey, Tennessee and Virginia. Soon, more will open in Florida, Illinois, Maryland, Ohio, Virginia and Wisconsin.

The transformation comes at a time when the company is hit with higher tariffs, as it imports parts from China, Mexico, and Canada. China accounts for about 10%, but by the end of the year, half of that China exposure will be sourced to other countries, CFO Ryan Grimsland said on the earnings call.

Like other companies, Advance Auto is looking to mitigate the tariff impact in several ways, like negotiating with vendor suppliers and using alternative sources of supply.

“And then finally, anything we can’t mitigate between vendors, sources of supply, we’re passing that on to price,” Grimsland said on the call. “Ultimately, we think the full value chain should bear some of that, whether that’s the vendor, the supplier, retailer and then ultimately the consumer are going to bear some of those impacts.”

Maintaining its outlook

That said, Advance Auto maintained its full year guidance, calling for net sales of $8.4 billion to $8.6 billion, comparable store sales increases of 0.5% to 1.5%, and EPS from continuing operations of $1.50 pr share to $2.50 per share.

Truist raised its price target for Advance Auto stock on Thursday to $51 per share, which is only slightly more than the current $49 per share. The median price target is $40, which would have been decent before today’s 57% gain. Maybe there will be more price target raises to follow.

If you were lucky enough to be on board already for today’s ride, then you’re no doubt happy. While it seems like the company is headed in the right direction, it may not be the best time to buy after such a huge jump.