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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Advance Auto Parts, Inc. (XNYS:AAP) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
AAP
Name:
ADVANCE AUTO PARTS, INC. (XNYS:AAP)
Sector:
822.62M
Industry:
Specialty Retail
CEO:
Mr. Thomas Greco
Total Employees:
41,000
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -484.41% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF ADVANCE AUTO PARTS, INC.(AAP) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND SPECIALTY RETAIL INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
171.73
One Month Price Target:
$172.92
Six Month Price Target :
$178.88
Likely Price in One Year's Time:
Ticker:
$186.04
Likely Trading Range Today Under (Normal Volatility)
$171.12
Price Upper limit ($) :
$172.48
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$163.58
This week:
$153.51
This month :
$135.29
Other Primary facts
Market Cap:
10.32B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
60.12M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
13.18%
-16.22%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$209.54
$192.19
$133.92
$151.27
Medium risk (<10%) entry points
Buy Call
Sell Call
$186.54
Buy Put:
Sell Put:
$182.84
$156.87
$160.62
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
AAP
Sharpe Ratio:
1.41%
Comparison:
AAP, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -50.74% lower than the industry
& is -38.18% lower than the market/S&P 500 average
Average Returns/Yield of
AAP
Daily returns:
0.04%
Weekly returns:
0.21%
Monthly returns:
0.83%
Yearly returns:
34.92%
Comparison of returns:
Average annual returns/yield (last 3 years) is -71.35% below industry average
Classification:
AAP, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.78
Statistical test of Returns:
AAP has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.33%
Weekly Volatility:
5.21%
Monthly Volatility:
10.42%
Yearly Volatility:
36.10%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.34%
Volatility in last five trading days has been -42.35% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-4.74%
Weekly VaR:
-10.61%
Monthly VaR:
-21.22%
How Much Can the price of
AAP
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-18%
Worst case (decline):
-73.50%
This translates to price declining to:
$140.33
This translates to price declining to:
$45.52
Severe Crash Probability
Risk of crash in next 6/12 months: Medium (<50%)
What is Value at Risk (VaR)?
Risk Fundamentals
AAP is a 49.75% riskier investment compared to the market/S&P 500 & is 28.29% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -43.90% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
AAP
Beta in relation to market/S&P 500--1.24
Expected beta in 1 year's time:
0.999
Expected beta in 3 year's time:
1.413
Unlevered (debt free) Beta:
0.644
Beta in relation to Nasdaq (XNAS):
0.689
Beta in relation to all global stocks::
0.702
Beta Comparison & Analysis
Beta of competitors/peers::
1.16
Beta is 6.92% higher than peers
Average Industry Beta:
1.43
Beta is -13.27% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
12.75%
Sustainable growth rate is -61.61% below industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.016
Alpha is -107.46% below industry average alpha yield
Alpha is -104% below the market average
Analysis of Cost of Capital of
AAP
Equity cost of capital:
0.116
Equity cost of capital is -10.04% below industry mean WACC
Unlevered (without debt) cost of capital:
6.05%
Before-tax cost of debt:
1.07%
After-tax cost of debt:
0.85%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
0.85%
WACC is 17.59% above industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$182.94
Revenue growth rate per share of (3Y):
3.55
Annual revenue growth rate is -46.44% below industry average
EPS:
$8.98
Expected Annual growth rate of EPS (3Y):
11.60%
Expected future EPS growth rate is -67.05% lower than the Specialty Retail industry
Free cash flow (FCF) per share:
$13.17
Balance sheet equity growth per share: 239.00%
Equity growth rate per share is 366.02% higher than the industry
Debt per share
$58.51
EBITDA per share
$18.36
Valuation Analysis Today of
AAP
P/E Ratio:
19.88
P/E Ratio of Competitors/Peers:
22.44
P/E ratio is -11.41% lower than main peers & is -7.57% lower than the industry
Stock price/value with industry average P/E ratio: $193.16
AAP is -11.09% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.94
Price to sales ratio is -76.92% below the industry mean
P/B (Price to book value ratio):
3.55
Price to free cash flow: 13.04
Price to free cash flow ratio is -37.18% lower than the industry
Net income growth rate (3Y):
11.37%
Net income growth rate is -102.40% lower than the industry average net income growth rate
Dividend Analysis
Dividend payout rate: 26.12%
Dividend yeild: 2.91%
Previous Dividend: $1.50
Previous adjusted dividend: $1.50
Previous Dividend: $5.00
Expected next dividend best case: $1.94
Expected next dividend worst case: $1.06
Average dividend payment (long-term): $0.68
Average dividend increase/decrease (growth rate) % per period: 60.61%
Expected next dividend payment date: 29/09/2022
Expected next dividend record date: 15/09/2022
-
Previous dividend payment date: 07/01/2022
Previous dividend record date: 17/06/2022
-
Dividend History:
2022-06-16--$1.50
2021-12-16--$1.00
2021-06-17--$1.00
2022-03-17--$1.50
2021-09-16--$1.00
2021-03-18--$0.25
Dividend growth rate is -27224.51% lower than the industry average
In-depth Debt & Leverage Analysis
Debt to equity ratio:
120.90%
Net debt to equity ratio:
116.13%
Debt to assets ratio:
29.31%
Net debt to assets ratio:
28.15%
Debt-to-asset ratio is -59.49% below industry average
Ability to repay debt:
Interest coverage ratio:
29.2
Interest coverage ratio is 17.92% more than industry average
Looking forward:
Debt growth rate:
307.79%
Annual debt growth is 338% higher than industry average debt growth rate
Debt repayment rate in previous year: 0.00%
Analysis of Key Statistics
Correlation of price movement with the market:
0.629
Statistical significance of correlation:
AAP has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.475
Stock price is 32.32% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.475
Correlation of price movement with Nasdaq (^IXIC):
0.024
Covariance of price movement with the market:
0.032
Kurtosis
8.964
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.99
Returns are left (negative) skewed; mean returns are lower than median and mode returns
Fundamental Analysis & Dupont Analysis of
AAP
Gross Profit Margin Ratio:
179%
Operating Profit Margin Ratio:
7.63%
Operating profit margin is 17.30% higher than the industry
Net Profit Margin Ratio:
179%
Effective Tax Rate:
23.55%
Effective tax rate is 4.43% higher than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
21.17%
Return on equity (ROE) is 1388.49% higher than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
5.13%
Return on assets (ROA) is -44.83% lower than the industry
Financial Leverage:
1.4x
Current Ratio:
1.2
Current ratio is -36.49% below industry average
Cash Conversion Cycle (days):
95.1
Cash conversion cycle is 46.97% above industry average
The remaining useful life of property plant & equipment is: 4.2 years
Stock based compensation to net income ratio:
10.24%
In-depth Efficiency Analysis
Revenue generated per employee:
268.2K
Each employee generates -64% less revenue than industry average revenue per employee
EBITDA generated per employee:
26.9K
Each employee generates -89% less EBITDA than industry average revenue per employee
Profit generated per employee:
15.0K
Each employee generates -90% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
20.1K
Each employee generates -51% less free cash flow than industry average revenue per employee
Assets/Capital per employee
145.0K
Each employee generates -51% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
AAP
BATH & BODY WORKS, INC. (XNYS:BBWI)
CROWN HOLDINGS, INC. (XNYS:CCK)
WHIRLPOOL CORPORATION (XNYS:WHR)
PULTEGROUP, INC. (XNYS:PHM)
ROLLINS, INC. (XNYS:ROL)
PACKAGING CORPORATION OF AMERICA (XNYS:PKG)
BURLINGTON STORES, INC. (XNYS:BURL)
INTERCONTINENTAL HOTELS GROUP PLC (XNYS:IHG)
VAIL RESORTS, INC. (XNYS:MTN)
Current Analyst Ratings
Strong buy�17%
Buy�38%
Hold�46%
Sell�4%
Strong sell�8%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
1/1/22
Revenue:
11.00B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
6.07B
4.93B
-
-
4.09B
-
-
4.09B
-
37.79M
259.93M
1.10B
838.72M
616.11M
805.93M
189.82M
616.11M
Statement of Cash Flow
Date:
Period:
259.93M
Differed Income Tax :
68.20M
Stock Based Compensation :
63.07M
Change in Working Capital :
103.99M
Accounts Receivables:
-
Other Working Capital:
- 134135.00K
Other Non-Cash Items:
964.00K
Net Cash Provided by Operating Activities:
1.11B
Investments in PP&E:
- 289639.00K
Net Acquisitions:
-
Purchases of Investments:
-
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
4/23/22
2022
Q1
138.73M
-
138.73M
957.80M
4.78B
182.40M
6.06B
4.26B
993.82M
642.12M
-
-
53.19M
5.94B
-
12.00B
3.94B
-
-
-
1.11B
5.05B
3.52B
102.19M
4.04B
-
9.09B
-
-
-
2.91B
January 1, 2022 at 7:00:00 AM
10.16B
2.91B
12.00B
-
3.52B
3.4B
-
2.33M
- 287314.00K
-
3.07M
- 906208.00K
- 160925.00K
- 53.00K
- 1064112.00K
5.60M
- 233564.00K
601.43M
834.99M
1.11B
- 289639.00K
822.62M
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
AAP
2023
2024
2025
2026
2027
$222.32
$240.84
$260.91
$282.65
$306.21