Advance Auto Parts Inc (AAP) Buy or Sell Stock Guide

Last updated: Oct 12, '19

Are you looking for the analysis of Advance Auto Parts Inc (AAP) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 4 reasons to buy and 7 reasons to sell AAP stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about AAP stock:

  • Is AAP a buy or a sell?
  • Should I sell or hold AAP stock today?
  • Is AAP a good buy / investment?
  • What are AAP analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy AAP stock:

1. The industry should consolidate around national retail chains that are able to efficiently provide more reliable and comprehensive part availability than smaller peers; Advance should benefit from this trend for years to come.

2. Industry-wide tailwinds persist, with miles driven growth, an aging vehicle fleet, and low unemployment bolstering sales.

3. AAP PEG ratio (P/E adjusted for growth) is 1.17, and it’s low compared to its industry peers’ PEG ratios. See AAP PEG chart.

4. AAP average analyst rating is Buy. See AAP analyst rating chart.

Now that you understand the bull case, let’s look at the reasons to sell AAP stock (i.e., the bear case):

1. With the General Parts integration ending, Advance’s new management team has an opportunity to reduce long-standing performance gaps with peers, boosting margins as it optimizes its supply chain and distribution practices.

2. The General Parts integration exacerbated Advance’s existing performance gaps with peers, with the disruption contributing to sales declines and margin pressure in 2016.

3. The current consolidation opportunity will reward firms that convert competitor accounts more quickly; if the revitalization takes longer than expected, Advance could miss a growth opportunity.

4. Increasing reliance on commercial sales, along with attendant investment in daily store inventory replenishment, will act as a moderate margin headwind that Advance will have to work to overcome.

5. AAP quarterly revenue growth was 0.20%, lower than the industry and sector average revenue growth (3.24% and 2.78%, respectively). See AAP revenue growth chart.

6. AAP profitability is declining. The YoY profit margin change was -0.65 percentage points. See AAP profitability chart.

7. AAP short share of float is 7.17%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See AAP short share of float chart.

Now let's look at the key statistics for AAP:

Metrics AAP
Price $163.72
Average Price Target / Upside $171.63 / 4.83%
Average Analyst Rating Buy
Industry Specialty Retail
Sector Consumer Cyclical
Number of Employees 71,000
Market Cap $11.23B
Forward P/E Ratio 17.38
Price/Book Ratio 1.16
PEG 1.11
Revenue (TTM) $9.66B
YoY Quarterly Revenue Growth 0.2%
Profit Margin 4.52%

What are your thoughts on AAP?

If you liked this analysis, check out Buy or Sell Stock Guides for other stocks.

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