AAP

Advance Auto Parts Inc

Consumer, Industrial/Transportation


Presented:07/30/2024
Price:$63.09
Cap:$3.76B
Current Price:$39.47
Cap:$2.36B

Presented

Date07/30/2024
Price$63.09
Market Cap$3.76B
Ent Value$8.24B
P/E Ratio91.08x
Book Value$43.01
Div Yield1.59%
Shares O/S59.62M
Ave Daily Vol1,487,378
Short Int18.01%

Current

Price$39.47
Market Cap$2.36B
Advance Auto Parts, Inc. engages in the supply and distribution of aftermarket automotive products for both professional installers and do-it-yourself customers. It operates through the following segments: Advance Auto Parts/Carquest U.S., Carquest Canada, Worldpac, and Independents. The company was founded by Arthur Taubman in 1929 and is headquartered in Raleigh, NC.

Publicly traded companies mentioned herein: Advance Auto Parts Inc (AAP), AutoZone Inc (AZO), Bayerische Motoren Werke AG (BMW GR), O’Reilly Automotive Inc (ORLY)

Highlights

The presenter is short shares of Advance Auto Parts Inc (AAP), citing concerns around the company’s lack of price competitiveness in its DIY segment and supply chain issues in the DIFM segment, which put it at a disadvantage to its peers. AAP is also looking to sell its OE wholesale distributor, Worldpac, which the presenter believes could garner a lower value than expected and lead to revenue dissynergies. The stock is trading 20x his FY2024 EPS (17x consensus EPS) as his EPS estimate is 20% below consensus, and believes 20x is too high for the third player in a competitive market. While he doesn’t have a specific price target, the stock could trade at 15x on $3 of EPS for 27% downside, but even at $45 per share he would likely remain short the stock, expecting continued declines from that level given AAP's position as a structurally impaired #3 player in a competitive market.

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Idea Discussion

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