NYSE:AAP

Stock Analysis Report

Executive Summary

Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks.

Rewards

Trading at 29.1% below its fair value

Earnings are forecast to grow 11.8% per year

Earnings grew by 14.5% over the past year

Risk Analysis

No risks detected for AAP from our risk checks.


Snowflake Analysis

Flawless balance sheet with proven track record.


Similar Companies

Share Price & News

How has Advance Auto Parts's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: AAP has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-4.0%

AAP

-6.6%

US Specialty Retail

-7.6%

US Market


1 Year Return

-15.0%

AAP

9.8%

US Specialty Retail

10.2%

US Market

Return vs Industry: AAP underperformed the US Specialty Retail industry which returned 9.8% over the past year.

Return vs Market: AAP underperformed the US Market which returned 10.2% over the past year.


Shareholder returns

AAPIndustryMarket
7 Day-4.0%-6.6%-7.6%
30 Day-3.3%-3.5%-4.5%
90 Day-15.3%-3.0%-0.6%
1 Year-14.9%-15.0%11.4%9.8%12.5%10.2%
3 Year-13.7%-14.1%34.5%28.0%37.1%28.3%
5 Year-10.0%-10.8%41.3%29.8%60.8%43.2%

Price Volatility Vs. Market

How volatile is Advance Auto Parts's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Advance Auto Parts undervalued compared to its fair value and its price relative to the market?

29.1%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: AAP ($134.54) is trading below our estimate of fair value ($189.75)

Significantly Below Fair Value: AAP is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: AAP is poor value based on its PE Ratio (19.6x) compared to the Specialty Retail industry average (14.9x).

PE vs Market: AAP is poor value based on its PE Ratio (19.6x) compared to the US market (17.1x).


Price to Earnings Growth Ratio

PEG Ratio: AAP is poor value based on its PEG Ratio (1.7x)


Price to Book Ratio

PB vs Industry: AAP is overvalued based on its PB Ratio (2.6x) compared to the US Specialty Retail industry average (1.3x).


Next Steps

Future Growth

How is Advance Auto Parts forecast to perform in the next 1 to 3 years based on estimates from 21 analysts?

11.8%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: AAP's forecast earnings growth (11.8% per year) is above the savings rate (1.7%).

Earnings vs Market: AAP's earnings (11.8% per year) are forecast to grow slower than the US market (13.2% per year).

High Growth Earnings: AAP's earnings are forecast to grow, but not significantly.

Revenue vs Market: AAP's revenue (1.7% per year) is forecast to grow slower than the US market (7.6% per year).

High Growth Revenue: AAP's revenue (1.7% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: AAP's Return on Equity is forecast to be low in 3 years time (14.6%).


Next Steps

Past Performance

How has Advance Auto Parts performed over the past 5 years?

-1.1%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: AAP has high quality earnings.

Growing Profit Margin: AAP's current net profit margins (5%) are higher than last year (4.4%).


Past Earnings Growth Analysis

Earnings Trend: AAP's earnings have declined by -1.1% per year over the past 5 years.

Accelerating Growth: AAP's earnings growth over the past year (14.5%) exceeds its 5-year average (-1.1% per year).

Earnings vs Industry: AAP earnings growth over the past year (14.5%) exceeded the Specialty Retail industry 7.9%.


Return on Equity

High ROE: AAP's Return on Equity (13.7%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Advance Auto Parts's financial position?


Financial Position Analysis

Short Term Liabilities: AAP's short term assets ($5.7B) exceed its short term liabilities ($4.5B).

Long Term Liabilities: AAP's short term assets ($5.7B) exceed its long term liabilities ($3.2B).


Debt to Equity History and Analysis

Debt Level: AAP's debt to equity ratio (21.1%) is considered satisfactory.

Reducing Debt: AAP's debt to equity ratio has reduced from 83.2% to 21.1% over the past 5 years.

Debt Coverage: AAP's debt is well covered by operating cash flow (116%).

Interest Coverage: AAP's interest payments on its debt are well covered by EBIT (19x coverage).


Balance Sheet

Inventory Level: AAP has a high level of physical assets or inventory.

Debt Coverage by Assets: AAP's debt is covered by short term assets (assets are 7.6x debt).


Next Steps

Dividend

What is Advance Auto Parts's current dividend yield, its reliability and sustainability?

0.74%

Current Dividend Yield


Upcoming Dividend Payment

Purchase Advance Auto Parts before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company0.7%marketbottom25%1.5%markettop25%4.0%industryaverage1.9%forecastin3Years0.4%

Current dividend yield vs market & industry

Notable Dividend: AAP's dividend (0.74%) isn’t notable compared to the bottom 25% of dividend payers in the US market (1.53%).

High Dividend: AAP's dividend (0.74%) is low compared to the top 25% of dividend payers in the US market (3.96%).


Stability and Growth of Payments

Stable Dividend: AAP is not paying a notable dividend for the US market, therefore no need to check if payments are stable.

Growing Dividend: AAP is not paying a notable dividend for the US market, therefore no need to check if payments are increasing.


Current Payout to Shareholders

Dividend Coverage: AAP is not paying a notable dividend for the US market.


Future Payout to Shareholders

Future Dividend Coverage: No need to calculate the sustainability of AAP's dividend in 3 years as they are not forecast to pay a notable one for the US market.


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure


CEO

Tom Greco (61yo)

3.8yrs

Tenure

US$8,856,135

Compensation

Mr. Thomas R. Greco, also known as Tom, has been the Chief Executive Officer of Advance Auto Parts, Inc. since April 11, 2016 and has been its President since August 14, 2016. Mr. Greco served as the Chief ...


CEO Compensation Analysis

Compensation vs Market: Tom's total compensation ($USD8.86M) is above average for companies of similar size in the US market ($USD6.51M).

Compensation vs Earnings: Tom's compensation has increased by more than 20% in the past year.


Leadership Team

NamePositionTenureCompensationOwnership
Thomas Greco
President3.8yrsUS$8.86m0.097% $8.9m
Jeffrey Shepherd
Executive VP & CFO1.8yrsUS$1.97m0.0038% $352.6k
Reuben Slone
Executive Vice President of Supply Chain1.3yrsUS$2.19m0.0012% $112.9k
Michael Broderick
Executive VP of Merchandising & Store Operations Support2.7yrsUS$1.73m0.0018% $166.6k
Robert Cushing
Executive Vice President of Professional0yrsUS$1.89m0.013% $1.2m
Carlos Saladrigas
Co-Founder and Chief Executive Officer of Regis HR0yrsno datano data
Andrew Page
Senior VP0.8yrsno datano data
Sri Donthi
Executive VP & CTO1.8yrsno datano data
Elisabeth Eisleben
Senior Vice President of Communications & Investor Relations0.3yrsno datano data
Tammy Finley
Executive VP5.1yrsUS$1.02m0.013% $1.2m

1.8yrs

Average Tenure

54yo

Average Age

Experienced Management: AAP's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

NamePositionTenureCompensationOwnership
Thomas Greco
President3.8yrsUS$8.86m0.097% $8.9m
Nigel Travis
Director1.5yrsUS$122.22k0.0018% $168.4k
Douglas Pertz
Independent Director2.1yrsUS$197.50k0.0017% $161.0k
Eugene Lee
Independent Director4.3yrsUS$240.00k0.0045% $420.1k
John Bergstrom
Independent Director11.8yrsUS$255.00k0.0075% $694.9k
Brad Buss
Independent Director3.9yrsUS$260.00k0.0017% $161.0k
John Ferraro
Independent Director5yrsUS$250.00k0.00073% $67.5k
Jeffrey Smith
Independent Chairman3.8yrsUS$340.00kno data
Jeffrey Jones
Independent Director1yrsno data0.0014% $134.2k
Adriana Karaboutis
Independent Director5yrsUS$240.00k0.00053% $49.0k

3.9yrs

Average Tenure

59yo

Average Age

Experienced Board: AAP's board of directors are considered experienced (3.9 years average tenure).


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Advance Auto Parts, Inc.'s company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Advance Auto Parts, Inc.
  • Ticker: AAP
  • Exchange: NYSE
  • Founded: 1929
  • Industry: Automotive Retail
  • Sector: Retail
  • Market Cap: US$9.253b
  • Shares outstanding: 68.78m
  • Website: https://www.advanceautoparts.com

Number of Employees


Location

  • Advance Auto Parts, Inc.
  • 2635 East Millbrook Road
  • Raleigh
  • North Carolina
  • 27604
  • United States

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
AAPNYSE (New York Stock Exchange)YesCommon SharesUSUSDNov 2001
AWNDB (Deutsche Boerse AG)YesCommon SharesDEEURNov 2001
0H9GLSE (London Stock Exchange)YesCommon SharesGBUSDNov 2001
AAP *BMV (Bolsa Mexicana de Valores)YesCommon SharesMXMXNNov 2001
A1AP34BOVESPA (Bolsa de Valores de Sao Paulo)BDR EACH 4 REPR 1 COMBRBRLJan 2020

Biography

Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. The company offers battery accessories; belts and hoses; brakes and brake pads; chassis and climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wires; radiators and cooling parts; starters and alternators; and steering and alignment parts. It also offers air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluids; electrical wires and fuses; electronics; floor mats, seat covers, and interior accessories; hand and specialty tools; lighting products; performance parts; sealants, adhesives and compounds; tire repair accessories; vent shades, mirrors and exterior accessories; washes, waxes and cleaning supplies; and wiper blades. In addition, the company offers air filters; fuel and oil additives; fuel filters; grease and lubricants; motor oils; oil filters, part cleaners and treatments; and transmission fluids for engine maintenance. Further, it offers battery and wiper installation; engine light scanning checking; electrical system testing; video clinic; oil and battery recycling; and loaner tool program services. Additionally, the company sells its products through its Website. It serves professional installers and do-it-yourself customers. Advance Auto Parts, Inc. operates its stores under the Advance Auto Parts, Autopart International, Carquest, and Worldpac brand names. As of December 28, 2019, the company operated 4,877 stores and 160 branches in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada; and served 1,253 independently owned Carquest branded stores in Mexico, the Bahamas, Turks and Caicos, and the British Virgin Islands. Advance Auto Parts, Inc. was founded in 1929 and is based in Raleigh, North Carolina. 


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2020/02/26 23:31
End of Day Share Price2020/02/26 00:00
Earnings2019/12/28
Annual Earnings2019/12/28


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.