What Happened?

Shares of auto parts and accessories retailer Advance Auto Parts (NYSE:AAP) jumped 53.2% in the afternoon session after the company reported impressive first-quarter 2025 results, which blew past analysts' sales and EPS expectations, despite shutting some of its stores to optimize operations. These optimization efforts resulted in roughly flat top-line sales as margins also came under pressure during the quarter.

However, its full-year EPS guidance trumped Wall Street's estimates as the company reaffirmed fiscal year 2025 guidance.

Overall, we think this was a very solid quarter with some key areas of upside, especially amid fears of economic weakness and tariff headwinds.

The shares closed the day at $49.27, up 57.5% from previous close.

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What The Market Is Telling Us

Advance Auto Parts’s shares are very volatile and have had 29 moves greater than 5% over the last year. But moves this big are rare even for Advance Auto Parts and indicate this news significantly impacted the market’s perception of the business.

The biggest move we wrote about over the last year was 9 months ago when the stock dropped 23.2% on the news that the company reported weak second-quarter 2024 earnings. Its full-year revenue guidance was lowered, which is never a good sign.

Adding to the pain was that the company's full-year earnings forecast missed analysts' expectations.

Overall, this quarter was mediocre.

Separately, the company announced the sale of Worldpac (automotive parts wholesale distribution business) to investment firm Carlyle, for $1.5 billion in cash. The Worldpac business drove approximately $2.1 billion in revenue and $100 million in EBITDA over the trailing twelve months before the sale was announced. The proceeds from the sale are expected to buffer the company's balance sheet as it streamlines its operations.

Advance Auto Parts is up 2.5% since the beginning of the year, but at $49.36 per share, it is still trading 30.1% below its 52-week high of $70.64 from May 2024. Investors who bought $1,000 worth of Advance Auto Parts’s shares 5 years ago would now be looking at an investment worth $369.79.

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