Advance’s Strong Start to 2021 Aligns With Our Favorable View of Its Turnaround; Shares Trade Fairly

Our $198 per share valuation of narrow-moat Advance is unlikely to change materially even though it announced a brisk start to 2021 with 25% first-quarter comparable growth. The strong growth was attributable to lapping the sector’s swoon in the corresponding period of 2020 as the pandemic began (comparisons were against a 9% comparable sales slide in that year’s opening frame) and transitory factors like economic stimulus and weather conditions. Thus, our long-term forecast still calls for 3%-4% top-line growth against low-double-digit operating margins.