Advance Auto Parts Equity Research

Did Advance Auto Parts Inc.  just have a good or bad quarter? The 3.1% increase in comparable-store sales, after four straight quarters of declines, certainly suggests the company is starting to generate traction with its turnaround plans. On the other hand, the sales figures were flattened by a couple of non-recurring factors, and the adjusted operating margin decline to 6% from 7.7% in the same period last year says management still has a lot of work to do. Let's take a closer look at the earnings.

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Advance Auto Parts Stock is a Buy

Advance Auto Parts Inc. has certainly found the integration of Carquest stores to be a much-harder job than it originally expected, but the new management team has started off by giving investors what they want. Is this a sign that the company has finally turned the corner? And is it now ready to catch up with its sector peers AutoZone, Inc. and O'Reilly Automotive?

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Why Advance Auto Parts is a Buy

Auto parts retailer Advance Auto Parts Inc.  has serially disappointed investors in the last year, while peers such as AutoZone, Inc.  and O'Reilly Automotive Inc.  have powered ahead in terms of operational performance and stock price.

Advance Auto parts is having difficulty integrating an acquisition that was supposed to transform the company's fortunes. Meanwhile, senior management have left and company guidance has been slashed for 2016. Is it madness to consider buying the stock? I don't think so, and here's why.

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What's Going on With Advance Auto Parts?

Advance Auto Parts is arguably an attractive deep-value stock, but you rarely get deep value without flaws attached. In this case, the company's integration of General Parts International (owners of Carquest and worldpac), and catching up with the kinds of margins boasted by rivals like O'Reilly Automotive and AutoZone, Inc ), have disappointed so far.
In fact, while its peers are busy generating healthy same-store-sales growth, Advance Auto Parts has turned negative. What exactly is going wrong, and can it be fixed?

DATA SOURCE: ADVANCE AUTO PARTS, INC PRESENTATIONS.

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Is Advance Auto Parts a Buy?

Advance Auto Parts offers a lot to investors in 2016: It's a deep-value stock in a recession-resistant industry. Same-store sales increased during the last recession for it, O'Reilly Automotive, and AutoZone, and through its 2014 acquisition of General Parts International (owner of Carquest and Worldpac), the company has an opportunity to raise its margin to the level of its peers.
Let's take a look at the latest fourth-quarter results and asses the investment proposition.

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Advance Auto Parts Looks a Good Value

The investment idea behind buying Advance Auto Parts is based on the belief that the company can play catch-up with rivals such as AutoZone and O'Reilly Automotive. It's an attractive proposition because Advance currently trades at a substantial discount to its peers. In my view, closing the gap could result in a near doubling of the stock price. But can Advance really achieve its aims? Here is what you need to know before buying the stock. 

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Advance Auto Parts: A Value Stock

Advance Auto Parts represents one of the most compelling deep-value stocks in the market. But a deep-value company is rarely one firing on all cylinders, and Advance Auto Parts has challenges ahead, as its management seeks to close the valuation gap with rivals AutoZone and O'Reilly Automotive. Let's take a closer look at the value proposition.

In a nutshell, the case for buying Advance Auto Parts rests on the idea that it can improve its operational metrics to the levels O'Reilly and AutoZone have achieved.

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Is Advance Auto Parts a Stock to Buy?

Back in October of last year, I took a look at the investment prospects  for Advance Auto Parts, (NYSE: AAP) stock. The investment case for buying the stock rests on the successful integration of General Parts International, a deal that results in Advance Auto becoming the largest auto parts retailer in the U.S.

With the stock up more than 25% since October, I thought it would be time to update investors on progress with the integration. Is it going smoothly enough to justify the stock price move?


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Why Are Insiders Buying Advance Auto Parts Stock?

It's always useful to keep an eye on insiders buying stock in their own companies. It's particularly intriguing when management is doing it while integrating a major acquisition. With that in mind, Fools should keep a close look out for stock in auto parts retailer Advance Auto Parts (NYSE: AAP  ) .



Earlier this year, the company completed the purchase of General Parts International -- owner of Carquest and Worldpac stores -- for just more than $2 billion. If the insider buying is a good tell, then the integration plan is working out just fine. It's time to take a closer look.

What the deal means for Advance Auto Parts
The market certainly likes the deal, because Advance Auto has noticeably outperformed its peers Autozone (NYSE: AZO  ) , Genuine Parts Company (NYSE: GPC  ) , and O'Reilly Automotive (NASDAQ: ORLY  ) in the year since it was announced.


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