AAP - Embedded Expectations Analysis - 2021 01 22
Advance Auto Parts, Inc. (AAP:USA) currently trades above historical averages relativeto UAFRS-based (Uniform) earnings, with a 27.5x Uniform P/E. At these levels, the market has expectations for profitability to remain flat, but management may be concerned about margin expansion, supply chain initiatives, and their professional business
Specifically, management may lack confidence in their ability to sustain gross margin expansion, execute their supply chain integration initiatives, and grow the professional business utilizing their Carquest Technical Institute. In addition, they may have concerns about their top-line performance, the costs of underperforming lease buy-outs, and the wide gap in performance across their various regions. Furthermore, management may be exaggerating the potential of their new brand launches, the progress of their CBR initiative program, and the quality of their brake program
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.
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