Overreaction to Advance Auto Parts' Poor 2Q Creates Opportunity for Patient Investors
While we plan a high-single-digit percentage cut to our $169 fair value estimate for narrow-moat Advance Auto Parts after disappointing earnings, we believe the firm's ability to turn around operations and deliver long-term returns--particularly once cyclical industry headwinds abate--is intact and makes the shares attractive. We were surprised by the magnitude of margin deterioration: Advance posted a 214-basis-point adjusted operating margin dip in the second quarter and expects a 200- to 300-...Advance Auto Parts is an automotive aftermarket parts provider in North America, serving both professional installers (Professional), and do-it-yourself (DIY), customers as well as independently owned operators. The company's stores and branches provide a range selection of brand name, original equipment manufacturer and private label automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy duty trucks. Through its integrated operating approach, the company serves its Professional and DIY customers through a variety of channels ranging from brick and mortar store locations to self-service e-commerce sites.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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