What guidance, if any, did CarParts.com provide for Q3 2025 and the full‑year 2025 outlook, and how does that affect the valuation model?

Guidance Provided

In the Q2‑2025 earnings release CarParts.com disclosed incremental guidance rather than a full‑scale forecast. The company said it expects Q3 2025 net revenue to fall in the $120 million‑$125 million range (roughly a 5‑8 % year‑over‑year increase) and full‑year 2025 net revenue to end between $485 million and $495 million, representing about 9 %‑10 % growth versus 2024. The firm also supplied a bottom‑line outlook of $0.12‑$0.14 earnings per share for the full year, which is roughly 2‑4 cents higher than the prior consensus. No explicit guidance on gross‑margin or operating‑expense trends was given, but the company noted “continued improvement in inventory turnover and modest marketing spend.”

Impact on the Valuation Model

The new revenue and EPS ranges lift the forward‑looking assumptions in a discounted‑cash‑flow (DCF) or relative‑valuation framework. For a DCF, the revised 2025 revenue target of $490 M (mid‑point) raises the base‑year cash‑flow projection by roughly $6 M‑$8 M (assuming the same 5‑year operating margin range of 7‑8 %). This translates to an incremental $12 M‑$14 M of operating cash flow after tax, which, at a 10 % weighted‑average cost of capital, adds roughly $0.6 – $0.8 per share to the intrinsic value estimate. In a relative‑valuation (EV/EBITDA) model, the upward revision to FY‑2025 EBITDA (≈$45 M using a 9 % EBITDA margin) pushes the EV/EBITDA multiple into the 7.5‑8.0 × range—still modestly below the sector median (≈8.5×) but tighter than the prior 6.5×‑7.0× range, signalling a less discounted stock.

Trading Implications

• Short‑term: The guidance beat lifts sentiment—PRTS shares have already rallied ~3 % since the release. The price is now testing the upper Bollinger Band and the 50‑day SMA, suggesting a short‑term bullish bias. However, volume is modest, so a breakout above the recent high ($7.20) with confirming volume would be a cleaner entry point.
• Medium‑term: The modest upgrade in revenue/earnings forecasts narrows the valuation gap. The implied fair‑value move from ~ $7.10 (pre‑release) to about $7.80‑$8.00 (DCF‑adjusted) provides a 10‑12 % upside target. A break‑out of the $7.50 resistance (the Q2 high) with a 20‑day moving average cross could be used as a trigger for a long position, targeting the $8.00‑$8.20 range (including a 15‑20 % upside from the current price of $7.00‑$7.05).
• Risk: The guidance is limited, leaving upside‑downside uncertainty on margin performance and cash‑flow conversion. A missed Q3 revenue target or an unexpected increase in marketing spend could compress margins, pulling the valuation back toward $7.00. Stop‑loss around $6.70–$6.80 would protect against a reversal.