Advance Auto Parts Inc
Morningstar Rating for Stocks | Fair Value | Economic Moat | Capital Allocation |
---|---|---|---|
$51.00 | Ykdn | Qgpj |
Despite Near-Term Underperformance, Advance Should Be Able To Capitalize on Strong Industry Dynamics
Business Strategy and Outlook
Although narrow-moat Advance Auto Parts has long trailed its scaled peers in profitability, with long-standing operational inefficiencies exacerbated by its troubled 2014 purchase of General Parts, we believe its optimization efforts can unlock improved performance as it capitalizes on its balanced professional-DIY segment exposure. As Advance refocuses on closing performance gaps, we view it as poised to build share in a market that should gradually consolidate behind large retailers that can leverage a broad distribution network to efficiently provide a high standard of service. Its turnaround should benefit from strong industry conditions, which should remain favorable long term.