Advance Auto Parts, Inc.
Advance Auto Parts, Inc. Fundamental Analysis
Advance Auto Parts, Inc. (AAP) shows weak financial fundamentals with a PE ratio of 75.26, profit margin of 0.51%, and ROE of 2.00%. The company generates $8.6B in annual revenue with weak year-over-year growth of -1.25%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 2.4/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze AAP's fundamental strength across five key dimensions:
Efficiency Score
WeakAAP struggles to generate sufficient returns from assets.
Valuation Score
ModerateAAP shows balanced valuation metrics.
Growth Score
WeakAAP faces weak or negative growth trends.
Financial Health Score
ModerateAAP shows balanced financial health with some risks.
Profitability Score
WeakAAP struggles to sustain strong margins.
Key Financial Metrics
Is AAP Expensive or Cheap?
P/E Ratio
AAP trades at 75.26 times earnings. This suggests a premium valuation.
PEG Ratio
When adjusting for growth, AAP's PEG of 0.67 indicates potential undervaluation.
Price to Book
The market values Advance Auto Parts, Inc. at 1.51 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at -2.24 times EBITDA. This is generally considered low.
How Well Does AAP Make Money?
Net Profit Margin
For every $100 in sales, Advance Auto Parts, Inc. keeps $0.51 as profit after all expenses.
Operating Margin
Core operations generate -0.22 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $2.00 in profit for every $100 of shareholder equity.
ROA
Advance Auto Parts, Inc. generates $0.35 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Advance Auto Parts, Inc. generates limited operating cash flow of $-46.08M, signaling weaker underlying cash strength.
Free Cash Flow
Advance Auto Parts, Inc. generates weak or negative free cash flow of $-298.50M, restricting financial flexibility.
FCF Per Share
Each share generates $-4.97 in free cash annually.
FCF Yield
AAP converts -8.91% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
75.26
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
0.67
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.51
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.39
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
3.40
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.75
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.02
vs 25 benchmark
ROA
Return on assets percentage
0.003
vs 25 benchmark
ROCE
Return on capital employed
-0.00
vs 25 benchmark
How AAP Stacks Against Its Sector Peers
| Metric | AAP Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 75.26 | 25.25 | Worse (Expensive) |
| ROE | 2.00% | 1170.00% | Weak |
| Net Margin | 0.51% | 742.00% | Weak |
| Debt/Equity | 3.40 | 0.77 | Weak (High Leverage) |
| Current Ratio | 1.75 | 9.19 | Neutral |
| ROA | 0.35% | -6467.00% (disorted) | Weak |
AAP outperforms its industry in 0 out of 6 key metrics, but lagging in P/E Ratio.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Advance Auto Parts, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
11.29%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
-181.94%
Industry Style: Cyclical, Growth, Discretionary
DecliningFCF CAGR
-88.40%
Industry Style: Cyclical, Growth, Discretionary
Declining