AI Stock Memo: MPAA - Motorcar Parts of America - RankAlpha

MPAA

Rating neutralAI Memo

Motorcar Parts of America

As of 2026-05-05/Confidence medium

Open ticker Back to Memos

Data freshness

AI Memo

As of 2026-05-05 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

neutral

Confidence

medium

Horizon

—

Key catalyst

Large-customer normalization and sequential margin improvement • 2026-06-15

Expected move: +4%

Biggest risk

The bear view is that the Q3 weakness exposed how dependent MPAA remains on a few customers, while tariffs, limited pass-through, and inventory-heavy working capital can keep margins and cash conversion uneven even if sales recover.

Invalidation

Break below $8 or thesis failure.

What would change my mind?

The strongest supported bull points are a stated Q4 rebound in orders from the disrupted large customer, expected sequential gross-margin improvement, lower interest expense, and continued buybacks/deleveraging.

Research note

Recommendation

neutral

Confidence

medium

As of

2026-05-05

Base target

$12

p=45%

Bull target

$15

p=25%

Bear target

p=30%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

Q4 rebound must offset customer disruption and tariff drag
Buyback capacity and lower net bank debt provide valuation support
The strongest supported bull points are a stated Q4 rebound in orders from the disrupted large customer, expected sequential gross-margin improvement, lower interest expense, and continued buybacks/deleveraging.

BearKey bullets

Customer concentration is high: the three largest customers were 86% of fiscal 2025 sales and the largest customer alone was 39%, making any ordering disruption material.
[#10-K-2025-06-09]
Tariff and inflation pressure remain active: the 10-Q said nine-month gross margin absorbed $2.124 million of net tariff costs before price increases took effect, and the 10-K warned tariff mitigation may not be fully effective.

WatchKey bullets

Large-customer normalization and sequential margin improvement

Summary

High-level snapshot

Recommendation

neutral

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $12 (p=45%)

Bull/Bear spread: +36% / -32%

Vs latest close: Bull +36% · Base +4% · Bear -32%

Scenario probabilities

Bull Target: $15 (p=25%)Base Target: $12 (p=45%)Bear Target: $8 (p=30%)

Commentary

Current evidence is mostly filing- and earnings-release-driven, with the relevant headline cluster concentrated around February 9, 2026 and little fresh follow-through in the packet by May 5, 2026. That supports a low-buzz, monitoring-style stance. Social coverage was not provided, and analyst-revision breadth is thin, so absence of new reaction should not be read as bullish confirmation.

As of 2026-05-05 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

Q4 rebound must offset customer disruption and tariff drag
Buyback capacity and lower net bank debt provide valuation support

Scenarios

Bull Target (Scenario probability)

$15 / p=25% prob

Base Target (Scenario probability)

$12 / p=45% prob

Bear Target (Scenario probability)

$8 / p=30% prob

Price $11 as of 2026-05-29

Nearest Scenario: Base (∆ 4%)

Targets vs latest close: Bull +36% · Base +4% · Bear -32%

Sentiment & Exposure

News Sentiment (30d)

0.02

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-06-15
Large-customer normalization and sequential margin improvement
Management said sales to the pressured large customer were increasing in fiscal Q4, and Q3 gross margin improved sequentially to 19.6% from 18.0% in fiscal Q1 and 19.3% in fiscal Q2, with further improvement expected in Q4 as ordering activity recovers. Confirmation at the next results release is the clearest upside trigger. [#8-K-2026-02-09]
Prob 45.00% • Move 14.00% • Priced-in 50.00%

Short-term Catalysts

Next few weeks

Q4 rebound must offset customer disruption and tariff drag
2026-06-15
Fiscal Q3 sales fell to $167.7 million from $186.2 million as one large customer reduced orders due to store closures and distribution-center consolidation; management said orders from that customer were rising in fiscal Q4, but also revised fiscal 2026 sales guidance to $750-$760 million and noted tariffs in the outlook. This keeps the next print as a prove-it setup rather than a clean recovery call. [#8-K-2026-02-09]
Prob 55% • Move -10% • Priced-in 60%

Long-term Catalysts

Months to a year

Buyback capacity and lower net bank debt provide valuation support
2026-12-31
The board increased the repurchase authorization to $57.0 million in December 2025; $25.072 million remained available at December 31, 2025, while nine-month operating cash flow was $23.664 million and management said net bank debt had fallen to about $70.5 million. That does not fix demand risk, but it can support per-share value if execution stabilizes. [#10-Q-2026-02-09]
Prob 50% • Move 9% • Priced-in 45%

Risks

Customer concentration is high: the three largest customers were 86% of fiscal 2025 sales and the largest customer alone was 39%, making any ordering disruption material. [#10-K-2025-06-09]
Tariff and inflation pressure remain active: the 10-Q said nine-month gross margin absorbed $2.124 million of net tariff costs before price increases took effect, and the 10-K warned tariff mitigation may not be fully effective. [#10-Q-2026-02-09] [#10-K-2025-06-09]
Working-capital intensity is still meaningful: inventory rose to $398.98 million at December 31, 2025 from $359.669 million at March 31, 2025, and management tied Q3 operating cash use to inventory build for new business. [#10-Q-2026-02-09]

Peers

Symbol	Summary
SRI	Stoneridge is a more conventional auto-components small cap with operating exposure to vehicle electronics, but it is not a close comp to MPAA's remanufactured aftermarket mix; useful only as a loose auto-parts sentiment reference.
STRT	Strattec is another small-cap auto-parts name, but its security-hardware mix is not directly comparable to MPAA's aftermarket replacement and reman business; peer read-through is limited.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-05-05