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Advance Auto Parts Inc AAP

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New Turnaround Strategy Unlikely to Drive Near-Term Amelioration of Advance's Financial Results

Noah Rohr

For the better part of the past 15 years, Advance Auto Parts has grappled with bloated expenses and supply chain inefficiencies that continue to plague its cost structure and product availability. The company’s first two attempts at a strategic turnaround failed to materialize under past CEO Darren Jackson (2008-2015) and Tom Greco (2016-2023), and the firm has recently called upon Shane O’Kelly to lead another turnaround.

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Price vs Fair Value

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AAP is trading at a 534% premium.
Price
$41.38
Fair Value
$37.00
Uncertainty
High
1-Star Price
$63.25
5-Star Price
$61.70
Economic Moat
Fxrb
Capital Allocation
Nplbh

Bulls Say, Bears Say

Bulls

Advance’s top line should benefit as its sales mix skews toward the professional end market, which is a faster growing channel than DIY.

Bears

Electrification of the vehicle fleet could stymie demand for aftermarket auto parts as EVs have fewer moving parts than vehicles with an internal combustion engine.

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News

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Trading Information

Previous Close Price
—
Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
13.04
Price/Sales
0.22
Dividend Yield (Trailing)
2.42%
Dividend Yield (Forward)
2.42%
Total Yield
2.56%

Company Profile

Advance Auto Parts is a leading auto parts retailer in North America with more than 5,000 store and branch locations. About 60% of the firm’s sales are geared toward the professional channel, with the remaining 40% going to the do-it-yourself market. Through its vast store footprint and distribution network, Advance manages thousands of stock-keeping units conducive to various vehicle makes and models. The retailer primarily competes on the basis of inventory availability and service speed, making the operating efficiency of its hub and spoke distribution model critical to meeting customer needs.
Sector
Consumer Cyclical
Industry
Specialty Retail
Stock Style Box
Small Value
Total Number of Employees
69,000
Website
https://www.advanceautoparts.com

Competitors

Valuation

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Metric
AAP
GPC
ORLY
Price/Earnings (Normalized)
 13.0415.4928.85
Price/Book Value
 0.954.33—
Price/Sales
 0.220.864.20
Price/Cash Flow
 8.7612.2323.54
Price/Earnings
AAP
GPC
ORLY

Financial Strength

Metric
AAP
GPC
ORLY
Quick Ratio
 0.250.450.09
Current Ratio
 1.231.120.70
Interest Coverage
 0.5623.5414.78
Quick Ratio
AAP
GPC
ORLY

Profitability

Metric
AAP
GPC
ORLY
Return on Assets (Normalized)
 −0.03%7.41%17.27%
Return on Equity (Normalized)
 −0.12%30.57%—
Return on Invested Capital (Normalized)
 0.78%15.20%43.33%
Return on Assets
AAP
GPC
ORLY

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