BUY BUY BUY BUY: Advance Auto Parts Inc

December 27, 2015
NYSE: AAP
ADVANCE AUTO PARTS INC

BUY
A+
A-
HOLD
B+
Annual Dividend Rate

$0.24
B-
C+
Annual Dividend Yield

0.16%
SELL
C-
D+
Beta
0.79
Sector: Consumer Goods & Svcs

AAP BUSINESS DESCRIPTION
Advance Auto Parts, Inc., through its subsidiaries,
operates as a specialty retailer of automotive
replacement parts, accessories, batteries, and
maintenance items.
Weekly Price: (US$)
D-
E+
E-
Market Capitalization
$10.9 Billion
BUY
52-Week Range
$142.63-$201.24
Sub-Industry: Automotive Retail

SMA (50)
RATING SINCE
TARGET PRICE
03/12/2009
$195.64
Price as of 12/23/2015
$149.06
Source: S&P
SMA (100)
1 Year
2 Years
200
TARGET
PRICE
$195.64
TARGET
TARGETPRICE
PRICE$195.64
$195.64
TARGET
PRICE
$195.64
180
160
STOCK PERFORMANCE (%)

3 Mo.
Price Change
-15.25
1 Yr.
-7.53
140
3 Yr (Ann)
28.49
120
GROWTH (%)
Last Qtr
0.25
-1.40
-1.81
Revenues
Net Income
EPS
RETURN ON EQUITY (%)

AAP
Q3 2015
20.84
Q3 2014
23.82
Q3 2013
27.76
12 Mo.
10.26
9.67
9.30
3 Yr CAGR
17.02
8.94
9.13
100
80
Rating History
BUY
Ind Avg
40.44
29.58
22.63
S&P 500
12.91
14.28
13.75
Volume in Millions
20
10
2014
2015
COMPUSTAT for Price and Volume, TheStreet Ratings, Inc. for Rating History
P/E COMPARISON
RECOMMENDATION
We rate ADVANCE AUTO PARTS INC (AAP) a BUY. This is driven by multiple strengths, which we believe
should have a greater impact than any weaknesses, and should give investors a better performance
opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its
revenue growth, reasonable valuation levels, largely solid financial position with reasonable debt levels by
most measures and expanding profit margins. We feel its strengths outweigh the fact that the company has
had lackluster performance in the stock itself.
21.89
25.58
21.75
AAP
Ind Avg
S&P 500
EPS ANALYSIS ($)
ADVANCE AUTO PARTS INC' earnings per share from the most recent quarter came in slightly below the year
earlier quarter. This company has reported somewhat volatile earnings recently. But, we feel it is poised for
EPS growth in the coming year. During the past fiscal year, ADVANCE AUTO PARTS INC increased its bottom
line by earning $6.71 versus $5.33 in the prior year. This year, the market expects an improvement in earnings
($7.85 versus $6.71).
2014
Q3 1.63
Q2 2.03
Q1 2.00
Q4 1.15
Q3 1.66
Q2 1.89
Q1 2.01
Q4 0.67
Q3 1.42
Q2 1.59
Q1 1.65
2013
HIGHLIGHTS
Despite its growing revenue, the company underperformed as compared with the industry average of 4.4%.
Since the same quarter one year prior, revenues slightly increased by 0.3%. This growth in revenue does not
appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
2015
NA = not available NM = not meaningful

1 Compustat fiscal year convention is used for all fundamental
data items.
The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been
successful management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick
ratio of 0.19 is very weak and demonstrates a lack of ability to pay short-term obligations.
47.67% is the gross profit margin for ADVANCE AUTO PARTS INC which we consider to be strong. Regardless
of AAP's high profit margin, it has managed to decrease from the same period last year. Despite the mixed
results of the gross profit margin, the net profit margin of 5.24% trails the industry average.
This report is for information purposes only and should not be considered a solicitation to buy or sell any security. Neither TheStreet Ratings nor any other party guarantees its accuracy
or makes warranties regarding results from its usage. Redistribution is prohibited without the express written consent of TheStreet Ratings. Copyright(c) 2006-2015. All rights reserved.
Report Date: December 27, 2015
PAGE 1
December 27, 2015

NYSE: AAP

Sector: Consumer Goods & Svcs Automotive Retail Source: S&P
$0.24

0.16%
PEER GROUP ANALYSIS
$10.9 Billion
52-Week Range
$142.63-$201.24
$149.06
INDUSTRY ANALYSIS
The specialty retail industry includes very well-known home improvement, apparel, automotive, and other
narrow-focus stores such as Home Depot (HD), TJX Companies (TJX), Lowes Companies (LOW), Gap (GPS),
Bed Bath & Beyond (BBBY), Ross Stores (ROST), Limited Brands (LTD), OReilly Automotive (ORLY), PetSmart
(PETM), Carmax (KMX), and Build-A-Bear Workshop (BBW).
REVENUE GROWTH AND EBITDA MARGIN*

70%
Beta
0.79
LAD
V
FA
AB
OR
PAG
ABG
AAP
GPI
AN
KMX
CST
ORLY
MNRO
LE
AB
-30%
R
VO
FA
MUSA
2.5%
22.5%
EBITDA Margin (TTM)

Companies with higher EBITDA margins and
revenue growth rates are outperforming companies
with lower EBITDA margins and revenue growth
rates. Companies for this scatter plot have a market
capitalization between $1.8 Billion and $25.1 Billion.
Companies with NA or NM values do not appear.
*EBITDA Earnings Before Interest, Taxes, Depreciation and
Amortization.
70%
REVENUE GROWTH AND EARNINGS YIELD
LAD
V
FA
AB
OR
LE
AB
-30%
R
VO
FA
3%
KMX
PEER GROUP: Specialty Retail

Ticker
AAP
AN
PAG
CST
MUSA
LAD
ORLY
MNRO
GPI
ABG
KMX
Recent
Company Name
Price ($)
149.06
AUTONATION INC
60.72
PENSKE AUTOMOTIVE GROUP INC 43.09
CST BRANDS INC
39.66
MURPHY USA INC
62.27
LITHIA MOTORS INC
109.67
O'REILLY AUTOMOTIVE INC
254.15
MONRO MUFFLER BRAKE INC
65.00
GROUP 1 AUTOMOTIVE INC
76.84
ASBURY AUTOMOTIVE GROUP INC 69.17
CARMAX INC
53.62
Market
Cap ($M)
10,917
6,717
3,881
2,999
2,912
2,599
25,069
2,079
1,821
1,756
10,593
Price/
Earnings
21.89
15.03
11.52
14.01
13.54
16.47
29.05
32.34
12.74
13.33
17.99
Net Sales
TTM ($M)
9,940.68
20,570.00
18,773.70
10,218.00
11,419.98
7,664.28
7,781.80
931.36
10,498.84
6,450.80
15,619.05
Net Income
TTM ($M)
503.01
461.80
327.60
218.00
208.00
176.41
894.32
66.21
146.06
139.90
625.54
The peer group comparison is based on Major Automotive Retail companies of comparable size.
LE
AAP
ORLY
MNRO
UN
Revenue Growth (TTM)
Some of the larger specialty retail companies also profit from the extension of credit to their customers with
branded credit cards.
Companies in this industry are judged based on the metric of same-store sales, a measurement that shows if
stores open for more than one year are increasing top line revenue or shrinking.
UN
Revenue Growth (TTM)
LE
The variety of product focuses targeted by specialty retail companies is very diverse. These include but are
not limited to home improvement goods, pharmaceutical & beauty, shoes, electronics, and office supplies.
Also included are stores narrowly focused on music, books, wine, games, rentals, vitamins, lumber, sporting
goods, toys, jewelry, and fashion apparel for men, women, and teddy bears.
AN GPIABGPAG
CST
MUSA
9%
Earnings Yield (TTM)

Companies that exhibit both a high earnings yield
and high revenue growth are generally more
attractive than companies with low revenue growth
and low earnings yield. Companies for this scatter
plot have revenue growth rates between -27.4% and
65.8%. Companies with NA or NM values do not
appear.
PAGE 2
December 27, 2015

NYSE: AAP

$0.24

0.16%
COMPANY DESCRIPTION
Advance Auto Parts, Inc., through its subsidiaries,
operates as a specialty retailer of automotive
replacement parts, accessories, batteries, and
maintenance items. It operates stores that offer brand
name, original equipment manufacturer, and private
label automotive products, including alternators,
batteries, belts and hoses, brakes and brake pads,
chassis parts, climate control parts, clutches, driveshafts,
engines and engine parts, ignition parts, lighting,
radiators, starters, spark plugs and wires, steering and
alignment parts, transmissions, water pumps, and
windshield wiper blades; accessories, such as air
fresheners, automotive paint, anti-theft devices,
emergency road kits, floor mats, ice scrapers, mirrors,
seat and steering wheel covers, and vent shades;
chemicals comprising antifreeze, brake and power
steering fluid, car washes and waxes, freon, fuel
additives, and windshield washer fluid; and oils,
transmission fluids, and other automotive petroleum
products for domestic and imported cars, vans, sport
utility vehicles, and light and heavy duty trucks. The
company also provides battery and wiper installation,
battery charging, check engine light reading, electrical
system testing, video clinics, loaner tool programs, and
oil and battery recycling services, as well as loaner tool
programs. In addition, it sells products online. The
company serves do-it-yourself, do-it-for-me, or
commercial customers in the northeastern, Mid-Atlantic,
and southeastern regions of the United States. As of July
18, 2015, it operated 5,252 stores and 117 Worldpac
branches; and served approximately 1,300
independently-owned Carquest branded stores in the
United States, Canada, Puerto Rico, and the U.S. Virgin
Islands. The company was founded in 1929 and is
headquartered in Roanoke, Virginia.
Store Support Center, 5008 Airport Road
Roanoke, VA 24012
USA
Phone: 540-362-4911
http://www.advanceautoparts.com
Employees: 73000
Beta
0.79
$10.9 Billion
52-Week Range
$142.63-$201.24
$149.06
STOCK-AT-A-GLANCE
Below is a summary of the major fundamental and technical factors we consider when determining our
overall recommendation of AAP shares. It is provided in order to give you a deeper understanding of our
rating methodology as well as to paint a more complete picture of a stock's strengths and weaknesses. It is
important to note, however, that these factors only tell part of the story. To gain an even more comprehensive
understanding of our stance on the stock, these factors must be assessed in combination with the stocks
valuation. Please refer to our Valuation section on page 5 for further information.
FACTOR
SCORE
3.5
Growth
out of 5 stars
weak
Measures the growth of both the company's income statement and
cash flow. On this factor, AAP has a growth score better than 60% of
the stocks we rate.
strong
3.0
Total Return
out of 5 stars
weak
Measures the historical price movement of the stock. The stock
performance of this company has beaten 50% of the companies we
cover.
strong
5.0
Efficiency
out of 5 stars
weak
Measures the strength and historic growth of a company's return on
invested capital. The company has generated more income per dollar of
capital than 90% of the companies we review.
strong
4.0
Price volatility
out of 5 stars
weak
Measures the volatility of the company's stock price historically. The
stock is less volatile than 70% of the stocks we monitor.
strong
5.0
Solvency
out of 5 stars
weak
Measures the solvency of the company based on several ratios. The
company is more solvent than 90% of the companies we analyze.
strong
3.0
Income
out of 5 stars
weak
Measures dividend yield and payouts to shareholders. The company's
dividend is higher than 50% of the companies we track.
strong
THESTREET RATINGS RESEARCH METHODOLOGY

TheStreet Ratings' stock model projects a stock's total return potential over a 12-month period including both
price appreciation and dividends. Our Buy, Hold or Sell ratings designate how we expect these stocks to
perform against a general benchmark of the equities market and interest rates. While our model is
quantitative, it utilizes both subjective and objective elements. For instance, subjective elements include
expected equities market returns, future interest rates, implied industry outlook and forecasted company
earnings. Objective elements include volatility of past operating revenues, financial strength, and company
cash flows.
Our model gauges the relationship between risk and reward in several ways, including: the pricing drawdown
as compared to potential profit volatility, i.e.how much one is willing to risk in order to earn profits; the level of
acceptable volatility for highly performing stocks; the current valuation as compared to projected earnings
growth; and the financial strength of the underlying company as compared to its stock's valuation as
compared to projected earnings growth; and the financial strength of the underlying company as compared
to its stock's performance. These and many more derived observations are then combined, ranked, weighted,
and scenario-tested to create a more complete analysis. The result is a systematic and disciplined method of
selecting stocks.
PAGE 3
December 27, 2015

NYSE: AAP

$0.24

0.16%
Consensus EPS Estimates ($)

IBES consensus estimates are provided by Thomson Financial
1.23
Q4 FY15
7.85 E
9.21 E
2015(E)
2016(E)
Beta
0.79
$10.9 Billion
52-Week Range
$142.63-$201.24
$149.06
FINANCIAL ANALYSIS
ADVANCE AUTO PARTS INC's gross profit margin for the third quarter of its fiscal year 2015 is essentially
unchanged when compared to the same period a year ago. Even though sales increased, the net income has
decreased. ADVANCE AUTO PARTS INC has very weak liquidity. Currently, the Quick Ratio is 0.19 which
clearly shows a lack of ability to cover short-term cash needs. The company's liquidity has increased from
the same period last year.
At the same time, stockholders' equity ("net worth") has greatly increased by 25.32% from the same quarter
last year. The key liquidity measurements indicate that the company is in a position in which financial
difficulties could develop in the near future.
STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the
next 12-months. To learn more visit www.TheStreetRatings.com.
INCOME STATEMENT
Net Sales ($mil)
EBITDA ($mil)
EBIT ($mil)
Net Income ($mil)
Q3 FY15
2,295.20
295.72
234.08
120.47
Q3 FY14
2,289.46
292.87
226.96
122.18
Q3 FY15
105.35
8,181.54
1,293.70
2,413.08
Q3 FY14
89.66
7,997.74
1,735.73
1,925.50
Q3 FY15
47.67%
12.88%
10.20%
1.22
6.14%
20.84%
Q3 FY14
48.06%
12.79%
9.91%
1.13
5.73%
23.82%
Q3 FY15
1.27
0.35
14.38
16.27
Q3 FY14
1.26
0.47
15.90
14.27
Q3 FY15
73
0.06
1.63
32.95
NA
1,213,960
Q3 FY14
73
0.06
1.66
26.38
NA
1,137,291
BALANCE SHEET
Cash & Equiv. ($mil)
Total Assets ($mil)
Total Debt ($mil)
Equity ($mil)
PROFITABILITY
Gross Profit Margin
EBITDA Margin
Operating Margin
Sales Turnover
Return on Assets
Return on Equity
DEBT
Current Ratio
Debt/Capital
Interest Expense
Interest Coverage
SHARE DATA
Shares outstanding (mil)
Div / share
EPS
Book value / share
Institutional Own %
Avg Daily Volume
2 Sum of quarterly figures may not match annual estimates due to

use of median consensus estimates.
PAGE 4
December 27, 2015

NYSE: AAP

$0.24

0.16%
RATINGS HISTORY
Our rating for ADVANCE AUTO PARTS INC has not
changed since 3/12/2009. As of 12/23/2015, the
stock was trading at a price of $149.06 which is
25.9% below its 52-week high of $201.24 and 4.5%
above its 52-week low of $142.63.
BUY: $109.84
2 Year Chart
Beta
0.79
$10.9 Billion
$200
$175
Price/Earnings
$150
$125
2014
Price reflects the closing price as of the date listed, if available
RATINGS DEFINITIONS &

DISTRIBUTION OF THESTREET RATINGS
(as of 12/23/2015)
31.01% Hold - We do not believe this stock offers

conclusive evidence to warrant the purchase or sale of
shares at this time and that its likelihood of positive total
return is roughly in balance with the risk of loss.
TheStreet Ratings
14 Wall Street, 15th Floor
New York, NY 10005
www.thestreet.com
Research Contact: 212-321-5381
Sales Contact: 866-321-8726
Price/Sales
discount
AAP 15.85
Peers 16.23
Average. The P/CF ratio, a stocks price divided by
the company's cash flow from operations, is useful
for comparing companies with different capital
requirements or financing structures.
AAP is trading at a valuation on par to its peers.
Price to Earnings/Growth
premium
discount
AAP 1.29
Peers 2.80
Discount. The PEG ratio is the stocks P/E divided
by the consensus estimate of long-term earnings
growth. Faster growth can justify higher price
multiples.
AAP trades at a significant discount to its peers.
Earnings Growth
lower
5
higher
AAP 9.30
Peers 22.99
Lower. Elevated earnings growth rates can lead to
capital appreciation and justify higher
price-to-earnings ratios.
However, AAP is expected to significantly trail its
peers on the basis of its earnings growth rate.
Sales Growth
discount
AAP 1.10
Peers 1.61
Discount. In the absence of P/E and P/B multiples,
the price-to-sales ratio can display the value
investors are placing on each dollar of sales.
AAP is trading at a significant discount to its
industry on this measurement.
premium
discount
AAP 4.52
Peers 11.35
Discount. A lower price-to-book ratio makes a
stock more attractive to investors seeking stocks
with lower market values per dollar of equity on the
balance sheet.
AAP is trading at a significant discount to its peers.
premium
29.57% Sell - We believe that this stock is likely to

decline by more than 10% over the next 12 months, with
the risk involved too great to compensate for any
possible returns.
AAP 16.18
Peers 21.76
Discount. A lower price-to-projected earnings ratio
than its peers can signify a less expensive stock or
lower future growth expectations.
AAP is trading at a discount to its peers.
Price/Book
Price/CashFlow
discount
premium
39.42% Buy - We believe that this stock has the

opportunity to appreciate and produce a total return of
more than 10% over the next 12 months.
discount
premium
To
Buy
AAP 21.89
Peers 25.58
Discount. A lower P/E ratio than its peers can
signify a less expensive stock or lower growth
expectations.
AAP is trading at a discount to its peers.
Price/Projected Earnings
From
Buy
$149.06
VALUATION
BUY. ADVANCE AUTO PARTS INC's P/E ratio indicates a discount compared to an average of 25.58 for the
Specialty Retail industry and a value on par with the S&P 500 average of 21.75. To use another comparison, its
price-to-book ratio of 4.52 indicates a significant premium versus the S&P 500 average of 2.74 and a
significant discount versus the industry average of 11.35. The price-to-sales ratio is well below both the S&P
500 average and the industry average, indicating a discount. Upon assessment of these and other key
valuation criteria, ADVANCE AUTO PARTS INC proves to trade at a discount to investment alternatives within
the industry.
premium
MOST RECENT RATINGS CHANGES

Date
Price
Action
12/23/13
$109.84 No Change
52-Week Range
$142.63-$201.24
lower
5
higher
AAP 10.26
Peers 6.25
Higher. A sales growth rate that exceeds the
industry implies that a company is gaining market
share.
AAP has a sales growth rate that significantly
exceeds its peers.
DISCLAIMER:
The opinions and information contained herein have been obtained or derived from sources believed to be reliable, but
TheStreet Ratings cannot guarantee its accuracy and completeness, and that of the opinions based thereon. Data is provided
via the COMPUSTAT Xpressfeed product from Standard &Poor's, a division of The McGraw-Hill Companies, Inc., as well as
other third-party data providers.
TheStreet Ratings is a division of TheStreet, Inc., which is a publisher. This research report contains opinions and is provided
for informational purposes only. You should not rely solely upon the research herein for purposes of transacting securities or
other investments, and you are encouraged to conduct your own research and due diligence, and to seek the advice of a
qualified securities professional, before you make any investment. None of the information contained in this report constitutes,
or is intended to constitute a recommendation by TheStreet Ratings of any particular security or trading strategy or a
determination by TheStreet Ratings that any security or trading strategy is suitable for any specific person. To the extent any of
the information contained herein may be deemed to be investment advice, such information is impersonal and not tailored to the
investment needs of any specific person. Your use of this report is governed by TheStreet, Inc.'s Terms of Use found at
http://www.thestreet.com/static/about/terms-of-use.html.
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December 27, 2015

ADVANCE AUTO PARTS INC

Annual Dividend Rate

Annual Dividend Yield

Sector: Consumer Goods & Svcs

Weekly Price: (US$)

Sub-Industry: Automotive Retail

STOCK PERFORMANCE (%)

RETURN ON EQUITY (%)

EPS ANALYSIS ($)

NA = not available NM = not meaningful

Report Date: December 27, 2015

December 27, 2015

ADVANCE AUTO PARTS INC

Annual Dividend Yield

PEER GROUP ANALYSIS

REVENUE GROWTH AND EBITDA MARGIN*

EBITDA Margin (TTM)

REVENUE GROWTH AND EARNINGS YIELD

PEER GROUP: Specialty Retail

Revenue Growth (TTM)

Revenue Growth (TTM)

Earnings Yield (TTM)

Report Date: December 27, 2015

December 27, 2015

ADVANCE AUTO PARTS INC

Annual Dividend Yield

THESTREET RATINGS RESEARCH METHODOLOGY

Report Date: December 27, 2015

December 27, 2015

ADVANCE AUTO PARTS INC

Annual Dividend Yield

Consensus EPS Estimates ($)

2 Sum of quarterly figures may not match annual estimates due to

Report Date: December 27, 2015

December 27, 2015

ADVANCE AUTO PARTS INC

Annual Dividend Yield

Price reflects the closing price as of the date listed, if available

RATINGS DEFINITIONS &

31.01% Hold - We do not believe this stock offers

29.57% Sell - We believe that this stock is likely to

39.42% Buy - We believe that this stock has the

MOST RECENT RATINGS CHANGES

Report Date: December 27, 2015

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