Advance Auto Parts Stock Rebounds 18% in November Amid Strong Earnings and Inventory Optimization

Advance Auto Parts Inc. (AAP) recorded a significant 18% increase in share price during November, marking a sharp reversal from earlier-year declines. The rebound followed the company’s release of its third-quarter financial results, which showed adjusted earnings per share of $2.37, surpassing analyst expectations of $2.15. Revenue reached $1.32 billion, a 2.4% year-over-year increase, supported by stronger same-store sales growth in the U.S. aftermarket segment. The positive momentum was anchored in the company’s progress on inventory optimization, with inventory levels decreasing by 7% compared to the prior year. This reduction contributed to a 120 basis point improvement in gross margin, reaching 44.3%, despite broader inflationary pressures. Management attributed the gains to improved supply chain execution and a shift toward faster-moving product lines, especially in replacement parts for light trucks and SUVs. Investors responded favorably to the updated full-year guidance, which raised adjusted EPS expectations to a range of $8.25 to $8.45, up from the previous $7.90 to $8.10. The revised outlook signaled confidence in sustained demand momentum and continued cost discipline. The stock’s performance outpaced the S&P 500’s 8.9% gain over the same period, highlighting strong relative strength in the specialty retail sector. The recovery has elevated AAP’s market cap to approximately $18.3 billion, reinforcing its position among key players in the automotive aftermarket. Analysts have upgraded the stock to 'Buy' from 'Hold' at multiple firms, citing the operational improvements and a more resilient retail footprint. The turnaround is particularly notable given the company’s 17% drop in 2024 through October.