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Advance Auto Parts Inc (AAP)



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Upturn Advisory Summary
01/21/2025: AAP (1-star) has a low Upturn Star Rating. Not recommended to BUY.
Analysis of Past Performance
Type Stock | Historic Profit -36.27% | Avg. Invested days 26 | Today’s Advisory Consider higher Upturn Star rating |
Upturn Star Rating ![]() ![]() | Upturn Advisory Performance ![]() | Stock Returns Performance ![]() |
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Key Highlights
Company Size Mid-Cap Stock | Market Capitalization 2.28B USD | Price to earnings Ratio - | 1Y Target Price 41.52 |
Price to earnings Ratio - | 1Y Target Price 41.52 | ||
Volume (30-day avg) 1877113 | Beta 1.29 | 52 Weeks Range 33.08 - 86.86 | Updated Date 03/13/2025 |
52 Weeks Range 33.08 - 86.86 | Updated Date 03/13/2025 | ||
Dividends yield (FY) 2.66% | Basic EPS (TTM) -9.84 |
Revenue by Products
Product revenue - Year on Year
Revenue by Geography
Earnings Date
Report Date 2025-02-26 | When Before Market | Estimate -1.2314 | Actual -1.18 |
Profitability
Profit Margin -3.69% | Operating Margin (TTM) -3.99% |
Management Effectiveness
Return on Assets (TTM) 0.15% | Return on Equity (TTM) -25.03% |
Valuation
Trailing PE - | Forward PE 25.06 | Enterprise Value 4063927910 | Price to Sales(TTM) 0.25 |
Enterprise Value 4063927910 | Price to Sales(TTM) 0.25 | ||
Enterprise Value to Revenue 0.45 | Enterprise Value to EBITDA 16.2 | Shares Outstanding 59792900 | Shares Floating 59295469 |
Shares Outstanding 59792900 | Shares Floating 59295469 | ||
Percent Insiders 1.52 | Percent Institutions 122.92 |
Analyst Ratings
Rating 3.03 | Target Price 43.71 | Buy 1 | Strong Buy 2 |
Buy 1 | Strong Buy 2 | ||
Hold 23 | Sell 2 | Strong Sell 1 | |
Strong Sell 1 |
Upturn AI SWOT
Advance Auto Parts Inc. (AAP) Overview
Company Profile
History and Background:
- Founded in 1998 as a spin-off from CSK Auto, with over 80 years of heritage in the automotive aftermarket industry.
- Grew rapidly through acquisitions and organic expansion, becoming a leading retailer and distributor of automotive parts, accessories, and tools.
- Currently operates over 6,000 stores and distribution centers across the United States, Canada, Puerto Rico, and the Virgin Islands.
Core Business Areas:
- Retail stores: Offer a wide range of automotive parts, accessories, and tools for both DIY and professional customers.
- Commercial business: Supplies parts and solutions to professional repair shops, dealerships, and fleet operators.
- e-Commerce: Growing online presence offering a convenient shopping experience and access to a broad selection of products.
Leadership Team and Corporate Structure:
- Tom Greco, CEO and President: Leading the company with extensive experience in the automotive aftermarket industry.
- Larry Costello, Executive Vice President and CFO: Overseeing the financial operations and driving growth strategies.
- Strong leadership team with expertise in retail, commercial, supply chain, and technology.
Top Products and Market Share
Top Products:
- Auto parts and accessories: Batteries, brakes, filters, spark plugs, wiper blades, etc.
- Tools and equipment: Diagnostics, engine repair, hand tools, power tools, etc.
- Performance and customization products: Lighting, exhaust systems, wheels, tires, etc.
Market Share:
- Leading player in the U.S. aftermarket, with a market share of approximately 14% in 2022.
- Strong regional presence, particularly in the Southeast and Sun Belt states.
- Facing competition from other major retailers like AutoZone and O'Reilly Automotive.
Total Addressable Market (TAM):
- The U.S. automotive aftermarket is estimated to be worth over $300 billion, with a global market exceeding $1 trillion.
- Growing demand driven by increasing vehicle ownership, aging car population, and technological advancements.
Financial Performance
Recent Financial Results:
- Revenue of $10.2 billion in 2022, with a slight decrease compared to 2021 due to supply chain challenges.
- Net income of $399 million in 2022, reflecting a decrease from the previous year.
- Profit margin of 3.9% in 2022, experiencing a slight compression compared to 2021.
- Earnings per share (EPS) of $4.99 in 2022, lower than the previous year.
Year-over-Year Comparison:
- Mixed financial performance with some decline in revenue and profitability compared to 2021.
- Facing headwinds from supply chain disruptions, inflationary pressures, and competitive landscape.
Cash Flow and Balance Sheet:
- Strong cash flow generation with operating cash flow exceeding $600 million in 2022.
- Healthy balance sheet with a debt-to-equity ratio of 0.6, indicating a manageable debt level.
Dividends and Shareholder Returns
Dividend History:
- Consistent dividend payer with a current annual dividend yield of around 2.5%.
- Recent dividend payout ratio of around 30%, indicating a sustainable dividend policy.
Shareholder Returns:
- Total shareholder return of approximately 10% over the past year, slightly underperforming the broader market.
- Long-term shareholder return (5-year) stands at around 50%, demonstrating past value creation.
Growth Trajectory
Historical Growth:
- Compound annual growth rate (CAGR) of revenue around 5% over the past five years.
- Organic growth initiatives combined with strategic acquisitions have fueled expansion.
Future Growth Projections:
- Industry analysts expect moderate revenue growth in the coming years, driven by aftermarket demand and market share gains.
- Company's focus on e-commerce and commercial business expansion expected to contribute to growth.
Market Dynamics
Industry Trends:
- Increasing demand for online shopping in the automotive aftermarket.
- Growing popularity of DIY repairs and maintenance.
- Technological advancements in vehicle repair and diagnostics.
Company Positioning:
- Strong omnichannel presence with both physical stores and online platform.
- Focus on professional and commercial markets offering growth potential.
- Continuous efforts to enhance customer experience and digital capabilities.
Competitors
Key Competitors:
- AutoZone (AZO)
- O'Reilly Automotive (ORLY)
- NAPA Auto Parts (private)
- Pep Boys (PEP)
Competitive Advantages:
- Vast store network and extensive distribution capabilities.
- Well-established brand recognition and customer loyalty.
- Investments in technology and digital platforms.
Potential Challenges and Opportunities
Challenges:
- Supply chain disruptions and inflationary pressures impacting costs and margins.
- Intense competition from other retailers and online platforms.
- Increasing vehicle repair complexity requiringspecialized skills and tools.
Opportunities:
- Expansion into new markets and product categories.
- Enhancements in e-commerce and digital experience to capture online growth.
- Development of innovative services and solutions for emerging vehicle technologies.
Recent Acquisitions
Past 3 Years:
- No significant acquisitions made in the past three years.
- Acquisitions have historically been a key growth strategy for Advance Auto Parts, increasing store count and expanding product offerings.
AI-Based Fundamental Rating
Rating: 7 out of 10 Justification:
- Strong market position as a leading aftermarket retailer with a vast store network.
- Mixed financial performance with recent slowdown but potential for recovery.
- Exposure to growing automotive aftermarket industry with expansion opportunities.
- Facing moderate competition and challenges related to supply chain and innovation.
Sources and Disclaimers
Sources:
- Advance Auto Parts Inc. website (investor relations)
- U.S. Census Bureau
- Market research reports
- Financial data from Bloomberg and Yahoo Finance
Disclaimer: This information is for educational purposes only and should not be considered as investment advice. Please conduct your own due diligence before making any investment decisions.
About Advance Auto Parts Inc
Exchange NYSE | Headquaters Raleigh, NC, United States | ||
IPO Launch date 2001-11-29 | President, CEO & Director Mr. Shane M. O'Kelly | ||
Sector Consumer Cyclical | Industry Specialty Retail | Full time employees 33200 | |
Full time employees 33200 |
Advance Auto Parts, Inc. engages in the provision of automotive aftermarket parts in the United States and internationally. The company offers batteries and battery accessories; belts and hoses; brakes and brake pads; chassis parts; climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wire; radiators and cooling parts; starters and alternators; and steering and alignment parts. It also provides air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluid; electrical wire and fuses; electronics; floor mats, seat covers and interior accessories; hand and specialty tools; lighting; 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 oil; oil filters; part cleaners and treatments; and transmission fluid. Further, it provides battery and wiper installation; engine light scanning and checking; electrical system testing, including batteries, starters, and alternators; oil and battery recycling; and loaner tool program services. The company serves professional installers and do-it-yourself customers. It operates stores under the Advance Auto Parts and Carquest names. The company has stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada; and independently owned Carquest branded stores in Mexico and the Caribbean Islands. Advance Auto Parts, Inc. was founded in 1929 and is based in Raleigh, North Carolina.
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