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

Last updated: Jul 20, '18

The analysis below may be 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 / a good investment?
  • What are AAP analyst opinions, recommendations, ratings?

Here are AAP stock buy reasons/signals:

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 profitability is improving. The YoY profit margin change was 0.27pp.

4. AAP average analyst rating is Buy.

Here are AAP stock sell reasons/signals:

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 stock price ($142.52) is close to the 52-week high ($143.37). Perhaps now is a good time to sell?

6. AAP quarterly revenue growth was -0.60%, lower than the industry and sector average revenue growth (1.74% and 5.01%, respectively).

7. AAP PEG ratio (P/E adjusted for growth) is 1.45, and it’s high compared to its industry peers’ PEG ratios.

8. AAP average analyst price target ($125.85) is below its current price ($142.52).

9. AAP short share of float is 6.19%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock.

10. AAP short interest (days to cover the shorts) ratio is 3.47. The stock garners more short interest than the average industry, sector or S&P 500 stock.

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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