AZO - Is Advance Auto Parts Stock in Trouble?
2023-06-11 05:24:00 ET
The stock of automotive aftermarket-parts retailer Advance Auto Parts (NYSE: AAP) is down 64.5% over the last year, in contrast to its peers O'Reilly Automotive (NASDAQ: ORLY) and AutoZone (NYSE: AZO) , which are up 42.7% and 16.4%, respectively. This is not a story of an industry in trouble, but rather one about the underperformance of a company within the sector and how retail investors could see the warning signs.
In 2015, highly respected activist investor Starboard Value thought it had identified a value opportunity in Advance Auto Parts that would see the stock price rise from $171 to $350. At the time of this writing, the company's stock is nearer $68.
Starboard's case was powerful and relied on a well-known value-based approach. Advance's margins and sales growth significantly lagged behind its two prominent peers, AutoZone and O'Reilly Automotive, and there was an opportunity to close the gap.
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Is Advance Auto Parts Stock in Trouble?