Advance Auto Parts Inc

AAP

Retail-Auto & Home Supply Stores

Mkt Cap

$4.171B

PE

140.27

Debt

$1.8B

Cash

$503.5M

EV

$5.467B

FCF

$44.96M

Market Cap

$4.171B

P/E Ratio

140.27

Debt

$1.8B

Cash

$503.5M

EV

$5.467B

FCF

$44.96M

Charts data: {"Earnings":[{"time":"2015-01-02","value":493825000},{"time":"2016-01-01","value":473398000},{"time":"2016-12-30","value":459622000},{"time":"2017-12-29","value":475505000},{"time":"2018-12-28","value":423847000},{"time":"2019-12-27","value":486896000},{"time":"2021-01-01","value":493021000},{"time":"2021-12-31","value":616108000},{"time":"2022-12-30","value":501872000},{"time":"2023-12-29","value":29735000}],"Sales":[{"time":"2015-01-02","value":9843861000},{"time":"2016-01-01","value":9737018000},{"time":"2016-12-30","value":9567679000},{"time":"2017-12-29","value":9373784000},{"time":"2018-12-28","value":9580554000},{"time":"2019-12-27","value":9709003000},{"time":"2021-01-01","value":10106321000},{"time":"2021-12-31","value":10997989000},{"time":"2022-12-30","value":11154722000},{"time":"2023-12-29","value":11287607000}],"Net Margins":[{"time":"2015-01-02","value":0.05016578352741877},{"time":"2016-01-01","value":0.04861837576966582},{"time":"2016-12-30","value":0.04803902806521833},{"time":"2017-12-29","value":0.05072711297806734},{"time":"2018-12-28","value":0.04424034351249416},{"time":"2019-12-27","value":0.050148918483185145},{"time":"2021-01-01","value":0.04878342969711728},{"time":"2021-12-31","value":0.0560200596672719},{"time":"2022-12-30","value":0.04499188774045646},{"time":"2023-12-29","value":0.0026343050391460297}],"Assets":[{"time":"2015-01-02","value":7962358000},{"time":"2016-01-01","value":8134565000},{"time":"2016-12-30","value":8315033000},{"time":"2017-12-29","value":8482301000},{"time":"2018-12-28","value":9040648000},{"time":"2019-12-27","value":11248525000},{"time":"2021-01-01","value":11839636000},{"time":"2021-12-31","value":12194209000},{"time":"2022-12-30","value":12018482000},{"time":"2023-12-29","value":12276326000}],"Stockholders Equity":[{"time":"2015-01-02","value":2002912000},{"time":"2016-01-01","value":2460648000},{"time":"2016-12-30","value":2916192000},{"time":"2017-12-29","value":3415196000},{"time":"2018-12-28","value":3550813000},{"time":"2019-12-27","value":3549081000},{"time":"2021-01-01","value":3559512000},{"time":"2021-12-31","value":3128291000},{"time":"2022-12-30","value":2678281000},{"time":"2023-12-29","value":2519728000}],"ROE":[{"time":"2015-01-02","value":0.2465535180776789},{"time":"2016-01-01","value":0.19238753369031247},{"time":"2016-12-30","value":0.157610335670628},{"time":"2017-12-29","value":0.13923212606245733},{"time":"2018-12-28","value":0.11936618458927575},{"time":"2019-12-27","value":0.13718931745992835},{"time":"2021-01-01","value":0.13850803143801735},{"time":"2021-12-31","value":0.19694715101632168},{"time":"2022-12-30","value":0.18738586429131224},{"time":"2023-12-29","value":0.011800876920048513}],"ROA":[{"time":"2015-01-02","value":0.10735538392019048},{"time":"2016-01-01","value":0.10151495500988682},{"time":"2016-12-30","value":0.09471976840019757},{"time":"2017-12-29","value":0.06722374035064306},{"time":"2018-12-28","value":0.06683978847533938},{"time":"2019-12-27","value":0.06020167088573835},{"time":"2021-01-01","value":0.06333868710152914},{"time":"2021-12-31","value":0.06877994300409317},{"time":"2022-12-30","value":0.05942106498973831},{"time":"2023-12-29","value":0.009316875423477675}]}

Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. The company offers battery accessories; belts and hoses; brakes and brake pads; chassis and climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wires; radiators and cooling parts; starters and alternators; and steering and alignment parts. It also offers air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluids; electrical wires and fuses; electronics; floor mats, seat covers, and interior accessories; hand and specialty tools; lighting products; 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 oils; oil filters, part cleaners and treatments; and transmission fluids for engine maintenance. Further, it offers 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. Additionally, the company sells its products through its website. It serves professional installers and do-it-yourself customers. The company operates stores under the Advance Auto Parts, Autopart International, and Carquest brands, as well as branches under the Worldpac name. 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, Grand Cayman, Caribbean Islands. The company was founded in 1929 and is based in Raleigh, North Carolina.

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DCF

Discounted Cash Flow Valuation of Advance Auto Parts Inc

Calculate

Growth Years

Growth

Start

End

Discount

Start

End

Multiple

g\r	+10%	+11%	+12%	+13%	+14%
0%	10	9	8	8	7
+1%	11	10	9	8	8
+2%	13	11	10	9	8
+3%	14	13	11	10	9
+4%	17	14	12	11	10

Years	0	1	2	3	4	5	6	7	8	9	10	TV
FCF	$44.96M	$44.32M	$43.68M	$43.05M	$42.43M	$41.82M	$41.22M	$40.62M	$40.04M	$39.46M	$38.89M	$388.9M
DCF		$38.54M	$33.03M	$28.31M	$24.26M	$20.79M	$17.82M	$15.27M	$13.09M	$11.22M	$9.613M	$96.13M
Value	$308.1M

Chart P/E ratio

In the chart Earnings are multiplied by this value.

Earnings Growth -5.6%

Earnings Stability 8.4%

Competitiveness and MOAT

High margins render the company resilient under dire circumstances, hence able to drive competitors out or acquire them. ROE and ROA measure the average flow generated by each invested dollar. Their marginal value is a forecast of future growth, and it is considered by Buffett and Munger the most important single indicator.

The Net Margin is too low to guarantee profitability in case of higher costs or higher interest rates. Furthermore lower margins cause higher earnings’ volatility.

Over time the ROA has been decreasing indicating a lower marginal ROA with respect to the calculated one, this could impede growth.

Years	01-2016	12-2016	12-2017	12-2018	12-2019	01-2021	12-2021	12-2022	12-2023	TTM
Net Margin	4.9%	4.8%	5.1%	4.4%	5%	4.9%	5.6%	4.5%	0.26%	0.26%
ROA	10%	9.5%	6.7%	6.7%	6%	6.3%	6.9%	5.9%	0.93%	0.93%
ROE	19%	16%	14%	12%	14%	14%	20%	19%	1.2%	1.2%

What is the average Net Margin?

The average Net Margin over the past 5 years is +4.11%.

What is the trend of Net Margin?

The trend of Net Margin over the past 5 years is -0.62%.

What is the average Return on Assets (ROA)?

The average ROA over the past 5 years is +5.46%.

What is the trend of Return on Assets (ROA)?

The trend of ROA over the past 5 years is -0.81%.

What is the average Return on Equity (ROE)?

The average ROE over the past 5 years is +13.19%.

What is the trend of Return on Equity (ROE)?

The trend of ROE over the past 5 years is -0.94%.

Safety & Stabiliy

Being debt the number one cause of investment losses and company death, the ratio Debt/FCF is of utmost importance to guarantee safety. On the other hand the Graham’s stability measures the drawdown of earnings, hence indicating the reliability of the flow generated by the company.

The company has high debt with respect to the cashflow it generates.

The Graham’s stability indicate a relevant drawdown, consider checking when it has occured and why.

Years	01-2016	12-2016	12-2017	12-2018	12-2019	01-2021	12-2021	12-2022	12-2023	TTM
Debt FCF	2.67	4.35	2.56	1.70	1.26	1.49	1.27	4.65	40.03	40.03
Debt Equity	0.49	0.36	0.31	0.30	0.21	0.29	0.33	0.52	0.71	0.71
MIN
Graham Stability	-	-	100%	90%	100%	100%	100%	94%	5.5%	5.5%

What is the Debt/FCF?

The Debt/FCF trailing twelve month is 40.03.

What is the trend of Debt/FCF?

The trend of Debt/FCF over the past 5 years is 5.76.

What is the Graham’s Stability?

Graham’s Stability measure stands at 0.06.

Growth

Growth can be dangerous when forecasting, simply projecting the current growth is in general wrong. A company passes through multiple phases, from being young and unprofitable, to the first periods of profitability and high growth, until it arrives at a period of regime with limited growth. Identifying in which phase the company is in may help forecasting.

Earnings growth has not been increasing in the past years.

Years	12-2016	12-2018	01-2021	12-2022	Trend
Revenue	2.4%	3.3%	3.8%	1.2%	0.7%
Net Income	-32%	-41%	-61%	-94%	-5.9%
Stockholders Equity	-2.1%	-6.6%	-11%	-5.9%	-4.6%
FCF	-21%	-41%	-60%	-85%	-8.5%

What is the 5 year Revenue CAGR?

The Revenue CAGR over the past 5 years is +3.33%.

What is the trend of Revenue growth?

The trend of Revenue growth rate over the past 5 years is +0.7%.

What is the 5 year Earnings CAGR?

The Earnings CAGR over the past 5 years is -41.22%.

What is the trend of Earnings growth?

The trend of Earnings growth rate over the past 5 years is -5.86%.

What is the 5 year Equity CAGR?

The Equity CAGR over the past 5 years is -6.63%.

What is the trend of Equity growth?

The trend of Equity growth rate over the past 5 years is -4.6%.

What is the 5 year FCF CAGR?

The FCF CAGR over the past 5 years is -40.78%.

What is the trend of FCF growth?

The trend of FCF growth rate over the past 5 years is -8.46%.