We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
2 Auto Retail Parts Stocks Still Worth Tracking in a Slowing Market
Read MoreHide Full Article
The Zacks Automotive - Retail and Wholesale - Parts industry is facing pressure from multiple fronts. Slowing vehicle sales, driven by high prices, inflation and elevated interest rates, are weighing on near-term demand. At the same time, increasing vehicle complexity is shifting repairs toward professionals, shrinking the DIY segment and disrupting traditional retail channels. Heavy investment needs in new technologies and digital capabilities are further straining margins and cash flows. While an aging vehicle fleet continues to support steady demand for maintenance and replacement parts, this remains one of the few bright spots, only partially offsetting broader headwinds facing the industry. Despite this challenging setup, stocks like Advance Auto Parts (AAP - Free Report) and Driven Brands Holdings (DRVN - Free Report) are worth a look.
About the Industry
The Zacks Automotive - Retail and Wholesale - Parts industry players execute several functions. These include retailing, distribution and installation of vehicle parts, equipment and accessories. Vehicle parts and accessories include seat covers, antifreeze, engine additives, wiper blades, batteries, brake system components, belts, chassis parts, driveline parts, engine parts and fuel pumps. Consumers have two options. They can either opt for repairing vehicles on their own (the ‘do-it-yourself’ or ‘DIY’ segment) or take the assistance of a professional repair facility (the "do-it-for-me" or "DIFM" segment). The industry is highly competitive and undergoing a radical change, with evolving customer expectations and technological innovation acting as game changers.
Key Investing Themes
Demand Moderation Ahead: The U.S. auto market is showing signs of slowing after a strong run last year. March sales are projected to decline nearly 12% year over year, mainly due to a tough comparison with last year’s pre-tariff buying surge. Monthly volumes are now easing, while high vehicle prices, inflation, and elevated interest rates continue to pressure consumer demand. Overall sales in 2026 are expected to dip slightly. This softer demand environment could also impact the auto retail parts industry, as fewer vehicle purchases may translate into lower demand for parts and accessories in the near term.
Shift Toward Professional Repairs: Advancing vehicle technology is changing how repairs are done. Modern cars now come with complex electronics and specialized systems, making them harder for individuals to fix on their own. As a result, fewer consumers are opting for DIY repairs, while more are turning to professional mechanics. This shift is reducing demand in the DIY segment but boosting the DIFM side of the market. Companies that supply parts and services to professional repair shops are likely to benefit, even as traditional retail sales to individual customers face some pressure.
Rising Investment Pressure: Staying competitive in the evolving auto industry requires significant investment. Companies are spending heavily on new technologies like EVs and advanced systems, while also upgrading distribution networks and digital platforms. These investments are necessary to keep up with changing customer needs and industry trends. However, they come at a cost—putting pressure on cash flows and squeezing profit margins. As a result, auto parts retailers and manufacturers must carefully balance growth initiatives with cost control, making efficient capital allocation a key challenge in the current environment.
Aging Vehicle Fleet Supports Demand: The average age of vehicles in the United States has climbed to a record 12.8 years, creating steady demand for maintenance and replacement parts. Older cars typically require more frequent repairs, which benefits the aftermarket industry. At the same time, many consumers are holding on to their vehicles longer instead of buying new ones, supporting consistent demand for parts and services. This trend provides a strong tailwind for auto parts retailers and repair shops, helping offset some of the broader challenges facing the industry.
Zacks Industry Rank Signals Lackluster Prospects
The Zacks Auto Retail & Wholesale Parts industry is within the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #202, which places it in the bottom 17% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are getting pessimistic about this group’s earnings growth potential.Over the past year, the industry's earnings estimate for 2026 has declined 9.5%.
Before we present a few stocks that could still be on your watchlist, let’s take a look at the industry’s shareholder returns and current valuation first.
Industry Lags Sector and S&P 500
The Zacks Auto Retail and Wholesale Parts industry has underperformed the Auto, Tires and Truck sector and the Zacks S&P 500 composite over the past year. The industry has declined 11.4% over this period against the sector and S&P 500’s growth of 26% and 16%, respectively.
One-Year Price Performance
Industry's Current Valuation
Since automotive companies are debt-laden, it makes sense to value them based on the Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) ratio.
Based on the trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 24.56X compared with the S&P 500’s 16.59X and the sector’s 28.15X.
Over the past five years, the industry has traded as high as 32.70X and as low as 22.15X, with the median being 26.21X, as the chart below shows.
EV/EBITDA Ratio (Past 5 Years)
2 Stocks in Focus
Advance Auto:It primarily sells replacement parts, batteries, accessories and maintenance items for a wide range of vehicles. After completing its store footprint optimization in 2025, the company is now focused on growth in markets where it already has strong store density. It plans to open 40–45 new stores in 2026 and expand its distribution network to improve product availability and delivery speed. Efforts like supply chain consolidation and a new operating model should enhance efficiency and service levels, especially for professional customers. These initiatives are expected to support modest sales growth of 1-2% in 2026, while margins improve to 3.8-4.5%, with further expansion anticipated in 2027.
Advance Auto currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2026 and 2027 EPS implies year-over-year growth of 22% and 41%, respectively. The consensus mark for the current and next year has moved north by 5 cents each over the past 30 days.
Price & Consensus: AAP
Driven Brands: It is the largest automotive services company in North America, offering services ranging from oil changes and maintenance to repair, collision, and glass work. With nearly 4,900 locations, the company serves millions of vehicles each year. A key growth driver is its Take 5 Oil Change business, which offers quick, stay-in-your-car service and continues to expand through franchising. The company also benefits from steady cash generation across its franchise-led model. At the same time, Driven Brands is streamlining operations by exiting non-core segments like car washes and focusing on reducing debt, positioning it for more stable growth ahead.
Driven Brands currently carries a Zacks Rank #3. The Zacks Consensus Estimate for its 2026 sales and EPS implies year-over-year growth of 8.5% and 20%, respectively.
View the Zacks #1 Rank List
Image: Bigstock
2 Auto Retail Parts Stocks Still Worth Tracking in a Slowing Market
The Zacks Automotive - Retail and Wholesale - Parts industry is facing pressure from multiple fronts. Slowing vehicle sales, driven by high prices, inflation and elevated interest rates, are weighing on near-term demand. At the same time, increasing vehicle complexity is shifting repairs toward professionals, shrinking the DIY segment and disrupting traditional retail channels. Heavy investment needs in new technologies and digital capabilities are further straining margins and cash flows. While an aging vehicle fleet continues to support steady demand for maintenance and replacement parts, this remains one of the few bright spots, only partially offsetting broader headwinds facing the industry. Despite this challenging setup, stocks like Advance Auto Parts (AAP - Free Report) and Driven Brands Holdings (DRVN - Free Report) are worth a look.
About the Industry
The Zacks Automotive - Retail and Wholesale - Parts industry players execute several functions. These include retailing, distribution and installation of vehicle parts, equipment and accessories. Vehicle parts and accessories include seat covers, antifreeze, engine additives, wiper blades, batteries, brake system components, belts, chassis parts, driveline parts, engine parts and fuel pumps. Consumers have two options. They can either opt for repairing vehicles on their own (the ‘do-it-yourself’ or ‘DIY’ segment) or take the assistance of a professional repair facility (the "do-it-for-me" or "DIFM" segment). The industry is highly competitive and undergoing a radical change, with evolving customer expectations and technological innovation acting as game changers.
Key Investing Themes
Demand Moderation Ahead: The U.S. auto market is showing signs of slowing after a strong run last year. March sales are projected to decline nearly 12% year over year, mainly due to a tough comparison with last year’s pre-tariff buying surge. Monthly volumes are now easing, while high vehicle prices, inflation, and elevated interest rates continue to pressure consumer demand. Overall sales in 2026 are expected to dip slightly. This softer demand environment could also impact the auto retail parts industry, as fewer vehicle purchases may translate into lower demand for parts and accessories in the near term.
Shift Toward Professional Repairs: Advancing vehicle technology is changing how repairs are done. Modern cars now come with complex electronics and specialized systems, making them harder for individuals to fix on their own. As a result, fewer consumers are opting for DIY repairs, while more are turning to professional mechanics. This shift is reducing demand in the DIY segment but boosting the DIFM side of the market. Companies that supply parts and services to professional repair shops are likely to benefit, even as traditional retail sales to individual customers face some pressure.
Rising Investment Pressure: Staying competitive in the evolving auto industry requires significant investment. Companies are spending heavily on new technologies like EVs and advanced systems, while also upgrading distribution networks and digital platforms. These investments are necessary to keep up with changing customer needs and industry trends. However, they come at a cost—putting pressure on cash flows and squeezing profit margins. As a result, auto parts retailers and manufacturers must carefully balance growth initiatives with cost control, making efficient capital allocation a key challenge in the current environment.
Aging Vehicle Fleet Supports Demand: The average age of vehicles in the United States has climbed to a record 12.8 years, creating steady demand for maintenance and replacement parts. Older cars typically require more frequent repairs, which benefits the aftermarket industry. At the same time, many consumers are holding on to their vehicles longer instead of buying new ones, supporting consistent demand for parts and services. This trend provides a strong tailwind for auto parts retailers and repair shops, helping offset some of the broader challenges facing the industry.
Zacks Industry Rank Signals Lackluster Prospects
The Zacks Auto Retail & Wholesale Parts industry is within the broader Zacks Auto-Tires-Trucks sector. The industry currently carries a Zacks Industry Rank #202, which places it in the bottom 17% of 245 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s positioning in the bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are getting pessimistic about this group’s earnings growth potential.Over the past year, the industry's earnings estimate for 2026 has declined 9.5%.
Before we present a few stocks that could still be on your watchlist, let’s take a look at the industry’s shareholder returns and current valuation first.
Industry Lags Sector and S&P 500
The Zacks Auto Retail and Wholesale Parts industry has underperformed the Auto, Tires and Truck sector and the Zacks S&P 500 composite over the past year. The industry has declined 11.4% over this period against the sector and S&P 500’s growth of 26% and 16%, respectively.
One-Year Price Performance
Industry's Current Valuation
Since automotive companies are debt-laden, it makes sense to value them based on the Enterprise Value/ Earnings before Interest, Tax, Depreciation and Amortization (EV/EBITDA) ratio.
Based on the trailing 12-month enterprise value to EBITDA (EV/EBITDA), the industry is currently trading at 24.56X compared with the S&P 500’s 16.59X and the sector’s 28.15X.
Over the past five years, the industry has traded as high as 32.70X and as low as 22.15X, with the median being 26.21X, as the chart below shows.
EV/EBITDA Ratio (Past 5 Years)
2 Stocks in Focus
Advance Auto:It primarily sells replacement parts, batteries, accessories and maintenance items for a wide range of vehicles. After completing its store footprint optimization in 2025, the company is now focused on growth in markets where it already has strong store density. It plans to open 40–45 new stores in 2026 and expand its distribution network to improve product availability and delivery speed. Efforts like supply chain consolidation and a new operating model should enhance efficiency and service levels, especially for professional customers. These initiatives are expected to support modest sales growth of 1-2% in 2026, while margins improve to 3.8-4.5%, with further expansion anticipated in 2027.
Advance Auto currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for its 2026 and 2027 EPS implies year-over-year growth of 22% and 41%, respectively. The consensus mark for the current and next year has moved north by 5 cents each over the past 30 days.
Price & Consensus: AAP
Driven Brands: It is the largest automotive services company in North America, offering services ranging from oil changes and maintenance to repair, collision, and glass work. With nearly 4,900 locations, the company serves millions of vehicles each year. A key growth driver is its Take 5 Oil Change business, which offers quick, stay-in-your-car service and continues to expand through franchising. The company also benefits from steady cash generation across its franchise-led model. At the same time, Driven Brands is streamlining operations by exiting non-core segments like car washes and focusing on reducing debt, positioning it for more stable growth ahead.
Driven Brands currently carries a Zacks Rank #3. The Zacks Consensus Estimate for its 2026 sales and EPS implies year-over-year growth of 8.5% and 20%, respectively.
Price & Consensus: DRVN
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.