Critical Analysis: Advance Auto Parts (AAP) versus The Competition

Advance Auto Parts (NYSE:AAP) is one of 285 publicly-traded companies in the “Specialty Retail” industry, but how does it weigh in compared to its competitors? We will compare Advance Auto Parts to similar companies based on the strength of its analyst recommendations, risk, dividends, valuation, profitability, earnings and institutional ownership.

Earnings & Valuation

This table compares Advance Auto Parts and its competitors top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Advance Auto Parts	$8.60 billion	$44.00 million	27.91
Advance Auto Parts Competitors	$7.06 billion	$386.51 million	31.15

Advance Auto Parts has higher revenue, but lower earnings than its competitors. Advance Auto Parts is trading at a lower price-to-earnings ratio than its competitors, indicating that it is currently more affordable than other companies in its industry.

Institutional & Insider Ownership

88.7% of Advance Auto Parts shares are owned by institutional investors. Comparatively, 51.9% of shares of all “Specialty Retail” companies are owned by institutional investors. 0.8% of Advance Auto Parts shares are owned by insiders. Comparatively, 20.5% of shares of all “Specialty Retail” companies are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for Advance Auto Parts and its competitors, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advance Auto Parts	3	15	3	0	2.00
Advance Auto Parts Competitors	3684	15612	21635	590	2.46

Advance Auto Parts currently has a consensus target price of $47.50, indicating a potential upside of 3.78%. As a group, “Specialty Retail” companies have a potential upside of 6.66%. Given Advance Auto Parts’ competitors stronger consensus rating and higher possible upside, analysts plainly believe Advance Auto Parts has less favorable growth aspects than its competitors.

Profitability

This table compares Advance Auto Parts and its competitors’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advance Auto Parts	1.16%	9.41%	1.77%
Advance Auto Parts Competitors	-3.62%	-13.77%	3.21%

Volatility and Risk

Advance Auto Parts has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500. Comparatively, Advance Auto Parts’ competitors have a beta of 1.91, meaning that their average share price is 91% more volatile than the S&P 500.

Dividends

Advance Auto Parts pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Advance Auto Parts pays out 61.0% of its earnings in the form of a dividend. As a group, “Specialty Retail” companies pay a dividend yield of 2.1% and pay out 35.6% of their earnings in the form of a dividend. Advance Auto Parts has raised its dividend for 1 consecutive years.

Summary

Advance Auto Parts competitors beat Advance Auto Parts on 10 of the 15 factors compared.

Advance Auto Parts Company Profile

Advance Auto Parts, Inc. is a retailer of automotive aftermarket parts, accessories and maintenance products. Its offerings include replacement parts, batteries, tools, fluids and other supplies for a range of vehicles. The company serves both do-it-yourself customers and professional automotive repair shops through its stores, online channels and network of independent locations. Its retail banners include Advance Auto Parts and Carquest. Advance Auto Parts traces its roots to 1932, when the business began in Roanoke, Virginia.