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Advance Auto Parts Inc
AAP : NYSE : Services
$121.11 -3.09 | -2.49%
Today's Range: 121.03 - 124.54
Avg. Daily Volume: 771,800
07/31/14 - 4:04 PM ET

Financial Analysis


ADVANCE AUTO PARTS INC's gross profit margin for the first quarter of its fiscal year 2014 has decreased when compared to the same period a year ago. The company managed to grow both sales and net income at a faster pace than the average competitor in its industry this quarter as compared to the same quarter a year ago. ADVANCE AUTO PARTS INC has very weak liquidity. Currently, the Quick Ratio is 0.18 which clearly shows a lack of ability to cover short-term cash needs. The company's liquidity decreased from the same period a year ago, despite already having very weak liquidity to begin with. This would indicate deteriorating cash flow.

At the same time, stockholders' equity ("net worth") has greatly increased by 31.18% from the same quarter last year. The key liquidity measurements indicate that the company is in a position in which financial difficulties could develop in the near future.

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Income Statement Q1 FY14 Q1 FY13
Net Sales ($mil)2969.52015.3
EBITDA ($mil)359.51269.8
EBIT ($mil)271.3205.77
Net Income ($mil)147.73121.79


Balance Sheet Q1 FY14 Q1 FY13
Cash & Equiv. ($mil)83.36407.72
Total Assets ($mil)7913.074747.49
Total Debt ($mil)2072.61604.95
Equity ($mil)1666.631270.45


Profitability Q1 FY14 Q1 FY13
Gross Profit Margin48.5453.2
EBITDA Margin12.113.38
Operating Margin9.1410.21
Sales Turnover0.941.32
Return on Assets5.277.91
Return on Equity25.0629.59
Debt Q1 FY14 Q1 FY13
Current Ratio1.271.21
Debt/Capital0.550.32
Interest Expense23.6410.66
Interest Coverage11.4819.3


Share Data Q1 FY14 Q1 FY13
Shares outstanding (mil)72.9572.96
Div / share0.060.06
EPS2.011.65
Book value / share22.8517.41
Institutional Own % n/a n/a
Avg Daily Volume772123.0875011.0

Valuation


BUY. The current P/E ratio indicates a discount compared to an average of 23.35 for the Specialty Retail industry and a premium compared to the S&P 500 average of 19.71. For additional comparison, its price-to-book ratio of 5.54 indicates a significant premium versus the S&P 500 average of 2.73 and a discount versus the industry average of 5.88. The current price-to-sales ratio is well below the S&P 500 average and is also below the industry average, indicating a discount. Upon assessment of these and other key valuation criteria, ADVANCE AUTO PARTS INC proves to trade at a discount to investment alternatives within the industry.


Price/Earnings
1 2 3 4 5
premium   discount
  Price/Cash Flow
1 2 3 4 5
premium   discount
AAP 22.25 Peers 23.35   AAP 18.78 Peers 18.58

Average. An average P/E ratio can signify an industry neutral price for a stock and an average growth expectation.

AAP is trading at a valuation on par with its peers.

 

Average. The P/CF ratio, a stock’s price divided by the company's cash flow from operations, is useful for comparing companies with different capital requirements or financing structures.

AAP is trading at a valuation on par to its peers.

 
Price/Projected
Earnings
1 2 3 4 5
premium   discount
  Price to
Earnings/Growth
1 2 3 4 5
premium   discount
AAP 15.00 Peers 18.21   AAP 0.52 Peers 1.73

Average. An average price-to-projected earnings ratio can signify an industry neutral stock price and average future growth expectations.

AAP is trading at a valuation on par with its peers.

 

Discount. The PEG ratio is the stock’s P/E divided by the consensus estimate of long-term earnings growth. Faster growth can justify higher price multiples.

AAP trades at a significant discount to its peers.

 
Price/Book
1 2 3 4 5
premium   discount
  Earnings Growth
1 2 3 4 5
lower   higher
AAP 5.54 Peers 5.88   AAP 12.00 Peers 24.72

Average. A lower price-to-book ratio makes a stock more attractive to investors seeking stocks with lower market values per dollar of equity on the balance sheet.

AAP is trading at a valuation on par with its peers.

 

Lower. Elevated earnings growth rates can lead to capital appreciation and justify higher price-to-earnings ratios.

However, AAP is expected to significantly trail its peers on the basis of its earnings growth rate.

 
Price/Sales
1 2 3 4 5
premium   discount
  Sales Growth
1 2 3 4 5
premium   discount
AAP 1.24 Peers 1.28   AAP 18.92 Peers 7.75

Average. In the absence of P/E and P/B multiples, the price-to-sales ratio can display the value investors are placing on each dollar of sales.

AAP is trading at a valuation on par with its industry on this measurement.

 

Higher. A sales growth rate that exceeds the industry implies that a company is gaining market share.

AAP has a sales growth rate that significantly exceeds its peers.

 

 

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