The quarterly results for Advance Auto Parts, Inc. (NYSE:AAP) were released last week, making it a good time to revisit its performance. Things were not great overall, with a surprise (statutory) loss of US$0.10 per share on revenues of US$2.1b, even though the analysts had been expecting a profit. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the current consensus, from the 14 analysts covering Advance Auto Parts, is for revenues of US$8.48b in 2025. This implies a sizeable 24% reduction in Advance Auto Parts' revenue over the past 12 months. Statutory earnings per share are predicted to jump 158% to US$2.05. In the lead-up to this report, the analysts had been modelling revenues of US$11.4b and earnings per share (EPS) of US$2.82 in 2025. It looks like sentiment has declined substantially in the aftermath of these results, with a pretty serious reduction to revenue estimates and a pretty serious reduction to earnings per share numbers as well.

It'll come as no surprise then, to learn that the analysts have cut their price target 5.9% to US$45.95. It could also be instructive to look at the range of analyst estimates, to evaluate how different the outlier opinions are from the mean. Currently, the most bullish analyst values Advance Auto Parts at US$66.00 per share, while the most bearish prices it at US$17.00. We would probably assign less value to the analyst forecasts in this situation, because such a wide range of estimates could imply that the future of this business is difficult to value accurately. With this in mind, we wouldn't rely too heavily the consensus price target, as it is just an average and analysts clearly have some deeply divergent views on the business.

Of course, another way to look at these forecasts is to place them into context against the industry itself. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 20% by the end of 2025. This indicates a significant reduction from annual growth of 2.8% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.6% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Advance Auto Parts is expected to lag the wider industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Advance Auto Parts. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Furthermore, the analysts also cut their price targets, suggesting that the latest news has led to greater pessimism about the intrinsic value of the business.

With that said, the long-term trajectory of the company's earnings is a lot more important than next year. We have forecasts for Advance Auto Parts going out to 2026, and you can see them free on our platform here.

You still need to take note of risks, for example - Advance Auto Parts has 3 warning signs (and 1 which is concerning) we think you should know about.

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