netrashetty
Netra Shetty
Advance Auto Parts (NYSE: AAP), headquartered in Roanoke, Virginia,[3] is the second-largest retailer of automotive replacement parts and accessories in the United States. AAP was founded in 1932 and had 2008 sales of approx. $5.1B. AAP operates 3,540 stores in 40 US states and employs over 51,000 Team Members across all operations.
In 2005, Advance Auto Parts purchased Autopart International, Inc. which operates 197 stores along the Atlantic Seaboard.
Advance Auto Parts (NYSE:AAP) is the second largest US retailer of automotive parts and accessories to do-it-yourself as well as a leader of the do-it-for-me automotive customer segment. Founded in 1929, the company operates 3,420 stores, the vast majority of which are in the United States and which have commercial delivery programs catered toward the independent garages and other commercial customers whose end-user do it for me (DIFM) customers seek maintenance from them.[1] Like most companies in the do it yourself (DIY) segment, AAP targets demographic regions in which they estimate there to exist a large number of old vehicles, given these cars’ propensity for repairs and maintenance.
Operating in a mature and fragmented marketplace, AAP achieved growth in two ways: for its bread-and-butter DIY segment, AAP has opened new stores to fuel growth while the smaller DIFM segment, same store sales grew by double digits. In addition, AAP has been facing pressure in a consolidating auto parts manufacturer industry (related to the woes of the Big Three automakers), which in turn decreases the company's pricing power it enjoys as one of the largest auto parts retailers in the U.S. Finally, in the longer term, the company may see decreased demand in auto parts due to continually rising oil prices, which could decrease the mileage driven by American and thus decrease the demand for car repairs and maintenance.
Company Overview
Business Financials
In 2009, AAP earned a total of $5.41 billion in total revenues, compared to its 2008 total revenues of $5.14 billion. 2009 was AAP's ninth straight year in which revenues have increased. As a result of the increase in revenues, AAP's net income increased as well. Between 2008 and 2009, AAP's net income increased from $238 million in 2008 to $290 million in 2009.[2]
Trends and Risks
The automotive aftermarket for parts has steadily, albeit modestly, increasing demand
In the US, increases in the number and age of vehicles, number of miles driven annually, licensed drivers, and total number of light trucks (which generally require greater upkeep) provide for a relatively steady and growing automotive parts market. The market, however, is mature and unlikely to experience significantly higher rates of growth. Also, increases in the quality of cars may offset the need for secondary purchases of repair equipment and parts.
DIFM is a slowing growth category
The company operates in a domestically mature and fragmented auto parts market, and growth has been respectable, though modest recently and driven almost entirely by new store openings in the DIY category, which accounts for nearly three-fourths of revenue, as opposed to the increase in same store sales driving the DIFM category (one-fourth of revenue).
AAP auto part suppliers have been experiencing a wave of consolidation
Auto part manufacturers, which operate in a generally troubled industry, have been consolidating via mergers or considering consolidation of late.[3] A more concentrated vendor base for auto part retailers, then, limits the number of companies that the firm can purchase inventory from, and may provide suppliers with greater pricing power, putting pressure on AAP’s margins. No supplier, however, represents more than 6% of AAP’s inventory purchases.
Oil Prices continue to rise
As oil prices continue to increase, drivers may begin to purchase newer, more fuel efficient vehicles--including [[hybrid and fuel cell vehicles]--and/or limit their driving mileage. Greater numbers of new car purchases and fewer drivers accumulating heavy mileage mean that consumer demand for repairs and new parts may be hampered, thus diminishing AAP's sales.
Competition and Market Share
The auto-part aftermarket retailer industry is a highly competitive and generally fragmented $118 billion/year market, with an estimated $35 billion represented by the DIY (do-it-yourself) category, $75 billion by the DIFM (do-it-for-me) category, and the rest represented elsewhere. Companies compete on a mix of customer service, product selection, price, and location.
In the DIY segment, AAP competes with other major do-it-yourself retailers, like O'Reilly Automotive (ORLY) , CSK Auto (CAO), Pep Boys-Manny, Moe & Jack (PBY), and AutoZone (AZO). In the DIFM segment, it competes with a highly fragmented base of small, single store mom-and-pop shops, repair destinations, full-service mechanics and other independent automotive destinations that sell parts or repair vehicles.
Latest Full Context Quarter Ending Date
2010/09
Gross Profit Margin
52.5%
EBIT Margin
9.6%
EBITDA Margin
12.4%
Pre-Tax Profit Margin
9.2%
Interest Coverage
22.2
Current Ratio
1.2
Quick Ratio
0.2
Leverage Ratio
3.0
Receivables Turnover
55.6
Inventory Turnover
1.6
Asset Turnover
1.8
Revenue to Assets
1.7
ROE from Total Operations
29.1%
Return on Invested Capital
23.0%
Return on Assets
9.8%
Debt/Common Equity Ratio
0.26
Price/Book Ratio (Price/Equity)
4.78
Book Value per Share
$13.59
Total Debt/ Equity
0.26
Long-Term Debt to Total Capital
0.21
SG&A as % of Revenue
40.1%
R&D as % of Revenue
0.0%
Receivables per Day Sales
$7.18
Days CGS in Inventory
228
Working Capital per Share
$4.45
Cash per Share
$2.31
Cash Flow per Share
$5.88
Free Cash Flow per Share
$5.23
Tangible Book Value per Share
$12.87
Price/Cash Flow Ratio
11.0
Price/Free Cash Flow Ratio
12.4
Price/Tangible Book Ratio
5.04
Most recent data
5-Year Averages
Return on Equity
22.7%
Return on Assets
8.6%
Return on Invested Capital
16.4%
Gross Profit Margin
50.9%
Pre-Tax Profit Margin
8.0%
Post-Tax Profit Margin
5.0%
Net Profit Margin (Total Operations)
5.0%
R&D as a % of Sales
0.0%
SG&A as a % of Sales
39.3%
Debt/Equity Ratio
0.38
Total Debt/Equity Ratio
0.47
Most recent data
In 2005, Advance Auto Parts purchased Autopart International, Inc. which operates 197 stores along the Atlantic Seaboard.
Advance Auto Parts (NYSE:AAP) is the second largest US retailer of automotive parts and accessories to do-it-yourself as well as a leader of the do-it-for-me automotive customer segment. Founded in 1929, the company operates 3,420 stores, the vast majority of which are in the United States and which have commercial delivery programs catered toward the independent garages and other commercial customers whose end-user do it for me (DIFM) customers seek maintenance from them.[1] Like most companies in the do it yourself (DIY) segment, AAP targets demographic regions in which they estimate there to exist a large number of old vehicles, given these cars’ propensity for repairs and maintenance.
Operating in a mature and fragmented marketplace, AAP achieved growth in two ways: for its bread-and-butter DIY segment, AAP has opened new stores to fuel growth while the smaller DIFM segment, same store sales grew by double digits. In addition, AAP has been facing pressure in a consolidating auto parts manufacturer industry (related to the woes of the Big Three automakers), which in turn decreases the company's pricing power it enjoys as one of the largest auto parts retailers in the U.S. Finally, in the longer term, the company may see decreased demand in auto parts due to continually rising oil prices, which could decrease the mileage driven by American and thus decrease the demand for car repairs and maintenance.
Company Overview
Business Financials
In 2009, AAP earned a total of $5.41 billion in total revenues, compared to its 2008 total revenues of $5.14 billion. 2009 was AAP's ninth straight year in which revenues have increased. As a result of the increase in revenues, AAP's net income increased as well. Between 2008 and 2009, AAP's net income increased from $238 million in 2008 to $290 million in 2009.[2]
Trends and Risks
The automotive aftermarket for parts has steadily, albeit modestly, increasing demand
In the US, increases in the number and age of vehicles, number of miles driven annually, licensed drivers, and total number of light trucks (which generally require greater upkeep) provide for a relatively steady and growing automotive parts market. The market, however, is mature and unlikely to experience significantly higher rates of growth. Also, increases in the quality of cars may offset the need for secondary purchases of repair equipment and parts.
DIFM is a slowing growth category
The company operates in a domestically mature and fragmented auto parts market, and growth has been respectable, though modest recently and driven almost entirely by new store openings in the DIY category, which accounts for nearly three-fourths of revenue, as opposed to the increase in same store sales driving the DIFM category (one-fourth of revenue).
AAP auto part suppliers have been experiencing a wave of consolidation
Auto part manufacturers, which operate in a generally troubled industry, have been consolidating via mergers or considering consolidation of late.[3] A more concentrated vendor base for auto part retailers, then, limits the number of companies that the firm can purchase inventory from, and may provide suppliers with greater pricing power, putting pressure on AAP’s margins. No supplier, however, represents more than 6% of AAP’s inventory purchases.
Oil Prices continue to rise
As oil prices continue to increase, drivers may begin to purchase newer, more fuel efficient vehicles--including [[hybrid and fuel cell vehicles]--and/or limit their driving mileage. Greater numbers of new car purchases and fewer drivers accumulating heavy mileage mean that consumer demand for repairs and new parts may be hampered, thus diminishing AAP's sales.
Competition and Market Share
The auto-part aftermarket retailer industry is a highly competitive and generally fragmented $118 billion/year market, with an estimated $35 billion represented by the DIY (do-it-yourself) category, $75 billion by the DIFM (do-it-for-me) category, and the rest represented elsewhere. Companies compete on a mix of customer service, product selection, price, and location.
In the DIY segment, AAP competes with other major do-it-yourself retailers, like O'Reilly Automotive (ORLY) , CSK Auto (CAO), Pep Boys-Manny, Moe & Jack (PBY), and AutoZone (AZO). In the DIFM segment, it competes with a highly fragmented base of small, single store mom-and-pop shops, repair destinations, full-service mechanics and other independent automotive destinations that sell parts or repair vehicles.
Latest Full Context Quarter Ending Date
2010/09
Gross Profit Margin
52.5%
EBIT Margin
9.6%
EBITDA Margin
12.4%
Pre-Tax Profit Margin
9.2%
Interest Coverage
22.2
Current Ratio
1.2
Quick Ratio
0.2
Leverage Ratio
3.0
Receivables Turnover
55.6
Inventory Turnover
1.6
Asset Turnover
1.8
Revenue to Assets
1.7
ROE from Total Operations
29.1%
Return on Invested Capital
23.0%
Return on Assets
9.8%
Debt/Common Equity Ratio
0.26
Price/Book Ratio (Price/Equity)
4.78
Book Value per Share
$13.59
Total Debt/ Equity
0.26
Long-Term Debt to Total Capital
0.21
SG&A as % of Revenue
40.1%
R&D as % of Revenue
0.0%
Receivables per Day Sales
$7.18
Days CGS in Inventory
228
Working Capital per Share
$4.45
Cash per Share
$2.31
Cash Flow per Share
$5.88
Free Cash Flow per Share
$5.23
Tangible Book Value per Share
$12.87
Price/Cash Flow Ratio
11.0
Price/Free Cash Flow Ratio
12.4
Price/Tangible Book Ratio
5.04
Most recent data
5-Year Averages
Return on Equity
22.7%
Return on Assets
8.6%
Return on Invested Capital
16.4%
Gross Profit Margin
50.9%
Pre-Tax Profit Margin
8.0%
Post-Tax Profit Margin
5.0%
Net Profit Margin (Total Operations)
5.0%
R&D as a % of Sales
0.0%
SG&A as a % of Sales
39.3%
Debt/Equity Ratio
0.38
Total Debt/Equity Ratio
0.47
Most recent data