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Advance Auto Parts Inc AAP Stock Quote

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NYSE:AAP

Morningstar‘s Stock Analysis AAP

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Is it the right time to buy or sell?
Is it the right time to buy or sell?

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INVESTOR

5-Star Price

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Economic Moat

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Capital Allocation

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Unimpressive Third Quarter at Advance Auto, but Long-Term Outlook Is Favorable; Shares Attractive

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Narrow-moat Advance Auto Parts saw sluggish third-quarter comparable sales (down 0.7%), and we expect to reduce our $219 per share valuation by a high-single-digit percentage in response. We ascribe the underperformance relative to scaled peers this year to its ongoing turnaround, with work remaining to improve part availability and bolster service levels. Our long-term forecast contemplates mid-single-digit percentage top-line growth and low-double-digit operating margins over the next decade. We see the shares as attractive for long-term investors willing to wait out the volatility associated with the optimization, with the shares’ midteens swoon in response to earnings striking us as a nearsighted reaction given Advance’s progress in improving its supply chain and distribution capabilities.

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Key Statistics AAP

Company Profile AAP

Business Description

Advance Auto Parts is one of the industry’s largest retailers of aftermarket automotive parts, tools, and accessories to do-it-yourself customers and third-party vehicle repair facilities in North America. Advance operated 4,972 stores as of the end of 2021, in addition to servicing 1,317 independently owned Carquest stores. The company’s Worldpac unit is a premier distributor of imported original-equipment parts. Advance derived 58% of its 2021 sales from commercial clients, with the remainder from DIY shoppers.

Contact
4200 Six Forks Road
Raleigh, NC, 27609
T +1 540 362-4911
Industry Specialty Retail
Most Recent Earnings Sep 30, 2022
Fiscal Year End Jan 1, 2023
Employees 68,000

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