Advance’s Q1 Shows Resilience Amid Inflation and Economic Uncertainty; Shares Attractive

Our $233 per share valuation of narrow-moat Advance is unlikely to change much after it posted first-quarter earnings that leave it poised to meet our 2022 targets. With indications that its second quarter is off to a solid start, the firm is demonstrating our view that it and its scaled peers possess considerable competitive advantages that insulate them from economic turbulence. We believe Advance is on track to reach our long-term targets (mid-single-digit percentage top-line growth, low-double-digit operating margins over the next decade) and believe prevailing sentiment does not adequately credit long-term profitability improvement opportunities from the firm’s work to streamline its supply chain and optimize its footprint, resulting in a buying opportunity.