ADVANCE AUTO PARTS INC (AAP) Stock Fundamental Analysis
NYSE:AAP - New York Stock Exchange, Inc. - US00751Y1064 - Common Stock
AAP gets a fundamental rating of 4 out of 10. The analysis compared the fundamentals against 119 industry peers in the Specialty Retail industry. While AAP is still in line with the averages on profitability rating, there are concerns on its financial health. AAP is valued correctly, but it does not seem to be growing.
1. Profitability
1.1 Basic Checks
AAP had positive earnings in the past year.
In the past year AAP had a positive cash flow from operations.
In the past 5 years AAP has always been profitable.
AAP had a positive operating cash flow in each of the past 5 years.
1.2 Ratios
The Return On Assets of AAP (0.67%) is comparable to the rest of the industry.
AAP has a Return On Equity (3.23%) which is in line with its industry peers.
AAP has a Return On Invested Capital of 1.79%. This is comparable to the rest of the industry: AAP outperforms 43.97% of its industry peers.
Measured over the past 3 years, the Average Return On Invested Capital for AAP is significantly below the industry average of 12.38%.
The 3 year average ROIC (7.36%) for AAP is well above the current ROIC(1.79%). The reason for the recent decline needs to be investigated.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.67% | ||
| ROE | 3.23% | ||
| ROIC | 1.79% |
ROA(3y)3.16%
ROA(5y)3.59%
ROE(3y)13.26%
ROE(5y)13.47%
ROIC(3y)7.36%
ROIC(5y)8.24%
1.3 Margins
AAP has a Profit Margin of 0.65%. This is comparable to the rest of the industry: AAP outperforms 50.86% of its industry peers.
AAP's Profit Margin has declined in the last couple of years.
The Operating Margin of AAP (1.11%) is comparable to the rest of the industry.
In the last couple of years the Operating Margin of AAP has declined.
Looking at the Gross Margin, with a value of 41.95%, AAP is in the better half of the industry, outperforming 64.66% of the companies in the same industry.
In the last couple of years the Gross Margin of AAP has declined.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| OM | 1.11% | ||
| PM (TTM) | 0.65% | ||
| GM | 41.96% |
OM growth 3Y-49.6%
OM growth 5Y-31.76%
PM growth 3Y-62.2%
PM growth 5Y-43.12%
GM growth 3Y-3.34%
GM growth 5Y-1.9%
2. Health
2.1 Basic Checks
With a Return on Invested Capital (ROIC) below the Cost of Capital (WACC), AAP is destroying value.
AAP has more shares outstanding than it did 1 year ago.
The number of shares outstanding for AAP has been reduced compared to 5 years ago.
Compared to 1 year ago, AAP has a worse debt to assets ratio.
2.2 Solvency
An Altman-Z score of 1.94 indicates that AAP is not a great score, but indicates only limited risk for bankruptcy at the moment.
AAP's Altman-Z score of 1.94 is in line compared to the rest of the industry. AAP outperforms 43.10% of its industry peers.
AAP has a debt to FCF ratio of 7.78. This is a slightly negative value and a sign of low solvency as AAP would need 7.78 years to pay back of all of its debts.
With a Debt to FCF ratio value of 7.78, AAP perfoms like the industry average, outperforming 55.17% of the companies in the same industry.
A Debt/Equity ratio of 0.69 indicates that AAP is somewhat dependend on debt financing.
AAP has a Debt to Equity ratio (0.69) which is in line with its industry peers.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 7.78 | ||
| Altman-Z | 1.94 |
ROIC/WACC0.18
WACC9.7%
2.3 Liquidity
AAP has a Current Ratio of 1.34. This is a normal value and indicates that AAP is financially healthy and should not expect problems in meeting its short term obligations.
AAP has a Current ratio (1.34) which is in line with its industry peers.
AAP has a Quick Ratio of 1.34. This is a bad value and indicates that AAP is not financially healthy enough and could expect problems in meeting its short term obligations.
Looking at the Quick ratio, with a value of 0.62, AAP is in the better half of the industry, outperforming 62.93% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Current Ratio | 1.34 | ||
| Quick Ratio | 0.62 |
3. Growth
3.1 Past
The earnings per share for AAP have decreased strongly by -81.28% in the last year.
AAP shows a very negative growth in Earnings Per Share. Measured over the last years, the EPS has been decreasing by -36.26% yearly.
Looking at the last year, AAP shows a quite strong growth in Revenue. The Revenue has grown by 14.81% in the last year.
The Revenue has been growing slightly by 3.33% on average over the past years.
EPS 1Y (TTM)-81.28%
EPS 3Y-55.5%
EPS 5Y-36.26%
EPS Q2Q%95.12%
Revenue 1Y (TTM)14.81%
Revenue growth 3Y3.75%
Revenue growth 5Y3.33%
Sales Q2Q%-21%
3.2 Future
AAP is expected to show a strong growth in Earnings Per Share. In the coming years, the EPS will grow by 50.35% yearly.
AAP is expected to show a decrease in Revenue. In the coming years, the Revenue will decrease by -4.46% yearly.
EPS Next Y-103.49%
EPS Next 2Y52.53%
EPS Next 3Y60.5%
EPS Next 5Y50.35%
Revenue Next Year-19.14%
Revenue Next 2Y-12.63%
Revenue Next 3Y-8.79%
Revenue Next 5Y-4.46%
3.3 Evolution
The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is decreasing.
4. Valuation
4.1 Price/Earnings Ratio
With a Price/Earnings ratio of 58.46, AAP can be considered very expensive at the moment.
Compared to the rest of the industry, the Price/Earnings ratio of AAP is on the same level as its industry peers.
AAP's Price/Earnings ratio indicates a rather expensive valuation when compared to the S&P500 average which is at 28.29.
A Price/Forward Earnings ratio of 26.46 indicates a quite expensive valuation of AAP.
AAP's Price/Forward Earnings ratio is in line with the industry average.
AAP's Price/Forward Earnings ratio indicates a similar valuation than the S&P500 average which is at 24.44.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.46 | ||
| Fwd PE | 26.46 |
4.2 Price Multiples
63.79% of the companies in the same industry are more expensive than AAP, based on the Enterprise Value to EBITDA ratio.
Based on the Price/Free Cash Flow ratio, AAP is valued cheaper than 84.48% of the companies in the same industry.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| P/FCF | 11.99 | ||
| EV/EBITDA | 9.4 |
4.3 Compensation for Growth
A more expensive valuation may be justified as AAP's earnings are expected to grow with 60.50% in the coming years.
PEG (NY)N/A
PEG (5Y)N/A
EPS Next 2Y52.53%
EPS Next 3Y60.5%
5. Dividend
5.1 Amount
With a Yearly Dividend Yield of 2.19%, AAP has a reasonable but not impressive dividend return.
Compared to an average industry Dividend Yield of 3.27, AAP pays a better dividend. On top of this AAP pays more dividend than 86.21% of the companies listed in the same industry.
Compared to an average S&P500 Dividend Yield of 2.28, AAP has a dividend comparable with the average S&P500 company.
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
5.2 History
On average, the dividend of AAP grows each year by 71.07%, which is quite nice.
AAP has been paying a dividend for at least 10 years, so it has a reliable track record.
Dividend Growth(5Y)71.07%
Div Incr Years0
Div Non Decr Years0
5.3 Sustainability
71.39% of the earnings are spent on dividend by AAP. This is not a sustainable payout ratio.
AAP's earnings are growing slower than its dividend. This means the dividend growth is not sustainable.
DP71.39%
EPS Next 2Y52.53%
EPS Next 3Y60.5%
ADVANCE AUTO PARTS INC
NYSE:AAP (1/21/2025, 8:04:00 PM)
After market: 45.39 -0.79 (-1.71%)46.18
+0.27 (+0.59%)
Chartmill FA Rating
GICS SectorConsumer Discretionary
GICS IndustryGroupConsumer Discretionary Distribution & Retail
GICS IndustrySpecialty Retail
Earnings (Last)
Earnings (Next)
Inst Owners110.45%
Inst Owner Change-0.66%
Ins Owners0.69%
Ins Owner Change-0.7%
Market Cap2.76B
Analysts56.67
Price Target44.42 (-3.81%)
Short Float %16.71%
Short Ratio4.05
Dividend
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Dividend Yield | 2.19% |
Yearly Dividend3.53
Dividend Growth(5Y)71.07%
DP71.39%
Div Incr Years0
Div Non Decr Years0
Ex-Date
Surprises & Revisions
EPS beat(2)0
Avg EPS beat(2)-64.41%
Min EPS beat(2)-108.05%
Max EPS beat(2)-20.77%
EPS beat(4)0
Avg EPS beat(4)-122.72%
Min EPS beat(4)-359.69%
Max EPS beat(4)-2.39%
EPS beat(8)1
Avg EPS beat(8)-89.25%
EPS beat(12)2
Avg EPS beat(12)-60.73%
EPS beat(16)5
Avg EPS beat(16)-44.14%
Revenue beat(2)0
Avg Revenue beat(2)-10.12%
Min Revenue beat(2)-19.64%
Max Revenue beat(2)-0.59%
Revenue beat(4)0
Avg Revenue beat(4)-5.69%
Min Revenue beat(4)-19.64%
Max Revenue beat(4)-0.59%
Revenue beat(8)2
Avg Revenue beat(8)-2.82%
Revenue beat(12)3
Avg Revenue beat(12)-2.4%
Revenue beat(16)5
Avg Revenue beat(16)-1.84%
PT rev (1m)0.18%
PT rev (3m)-17.75%
EPS NQ rev (1m)0%
EPS NQ rev (3m)-258.38%
EPS NY rev (1m)0%
EPS NY rev (3m)-101.17%
Revenue NQ rev (1m)0%
Revenue NQ rev (3m)-20.9%
Revenue NY rev (1m)-0.99%
Revenue NY rev (3m)-18.35%
Valuation
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| PE | 58.46 | ||
| Fwd PE | 26.46 | ||
| P/S | 0.21 | ||
| P/FCF | 11.99 | ||
| P/OCF | 6.65 | ||
| P/B | 1.06 | ||
| P/tB | 1.74 | ||
| EV/EBITDA | 9.4 |
EPS(TTM)0.79
EY1.71%
EPS(NY)1.75
Fwd EY3.78%
FCF(TTM)3.85
FCFY8.34%
OCF(TTM)6.95
OCFY15.04%
SpS217.13
BVpS43.49
TBVpS26.59
PEG (NY)N/A
PEG (5Y)N/A
Profitability
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| ROA | 0.67% | ||
| ROE | 3.23% | ||
| ROCE | 2.1% | ||
| ROIC | 1.79% | ||
| ROICexc | 1.92% | ||
| ROICexgc | 2.28% | ||
| OM | 1.11% | ||
| PM (TTM) | 0.65% | ||
| GM | 41.96% | ||
| FCFM | 1.77% |
ROA(3y)3.16%
ROA(5y)3.59%
ROE(3y)13.26%
ROE(5y)13.47%
ROIC(3y)7.36%
ROIC(5y)8.24%
ROICexc(3y)7.88%
ROICexc(5y)8.94%
ROICexgc(3y)10.57%
ROICexgc(5y)12.09%
ROCE(3y)8.63%
ROCE(5y)9.66%
ROICexcg growth 3Y-48.78%
ROICexcg growth 5Y-37.28%
ROICexc growth 3Y-48.27%
ROICexc growth 5Y-35.14%
OM growth 3Y-49.6%
OM growth 5Y-31.76%
PM growth 3Y-62.2%
PM growth 5Y-43.12%
GM growth 3Y-3.34%
GM growth 5Y-1.9%
F-Score8
Asset Turnover1.04
Health
| Industry Rank | Sector Rank | ||
|---|---|---|---|
| Debt/Equity | 0.69 | ||
| Debt/FCF | 7.78 | ||
| Debt/EBITDA | 4.13 | ||
| Cap/Depr | 64.07% | ||
| Cap/Sales | 1.43% | ||
| Interest Coverage | 250 | ||
| Cash Conversion | 95.87% | ||
| Profit Quality | 274.2% | ||
| Current Ratio | 1.34 | ||
| Quick Ratio | 0.62 | ||
| Altman-Z | 1.94 |
F-Score8
WACC9.7%
ROIC/WACC0.18
Cap/Depr(3y)113.55%
Cap/Depr(5y)129.11%
Cap/Sales(3y)2.87%
Cap/Sales(5y)3.22%
Profit Quality(3y)114.59%
Profit Quality(5y)113.46%
High Growth Momentum
Growth
EPS 1Y (TTM)-81.28%
EPS 3Y-55.5%
EPS 5Y-36.26%
EPS Q2Q%95.12%
EPS Next Y-103.49%
EPS Next 2Y52.53%
EPS Next 3Y60.5%
EPS Next 5Y50.35%
Revenue 1Y (TTM)14.81%
Revenue growth 3Y3.75%
Revenue growth 5Y3.33%
Sales Q2Q%-21%
Revenue Next Year-19.14%
Revenue Next 2Y-12.63%
Revenue Next 3Y-8.79%
Revenue Next 5Y-4.46%
EBIT growth 1Y-57.14%
EBIT growth 3Y-47.71%
EBIT growth 5Y-29.48%
EBIT Next Year70.65%
EBIT Next 3Y37.65%
EBIT Next 5Y23.14%
FCF growth 1Y-3.49%
FCF growth 3Y-59.99%
FCF growth 5Y-40.78%
OCF growth 1Y-38.12%
OCF growth 3Y-33.33%
OCF growth 5Y-18.74%