Advance Auto Parts (NYSE:AAP – Get Free Report) and Group 1 Automotive (NYSE:GPI – Get Free Report) are both mid-cap consumer discretionary companies, but which is the superior business? We will contrast the two businesses based on the strength of their earnings, profitability, institutional ownership, valuation, dividends, analyst recommendations and risk.
Analyst Recommendations
This is a breakdown of recent ratings for Advance Auto Parts and Group 1 Automotive, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Advance Auto Parts | 3 | 16 | 2 | 0 | 1.95 |
| Group 1 Automotive | 3 | 2 | 5 | 0 | 2.20 |
Advance Auto Parts currently has a consensus target price of $47.61, indicating a potential downside of 2.30%. Group 1 Automotive has a consensus target price of $328.30, indicating a potential upside of 19.61%. Given Group 1 Automotive’s stronger consensus rating and higher probable upside, analysts plainly believe Group 1 Automotive is more favorable than Advance Auto Parts.
Valuation and Earnings
This table compares Advance Auto Parts and Group 1 Automotive”s revenue, earnings per share (EPS) and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Advance Auto Parts | $8.60 billion | 0.34 | $44.00 million | $1.37 | 35.57 |
| Group 1 Automotive | $21.77 billion | 0.15 | $325.20 million | $31.60 | 8.69 |
Group 1 Automotive has higher revenue and earnings than Advance Auto Parts. Group 1 Automotive is trading at a lower price-to-earnings ratio than Advance Auto Parts, indicating that it is currently the more affordable of the two stocks.
Profitability
This table compares Advance Auto Parts and Group 1 Automotive’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Advance Auto Parts | 0.97% | 9.84% | 1.83% |
| Group 1 Automotive | 1.75% | 14.91% | 4.19% |
Volatility and Risk
Advance Auto Parts has a beta of 1.02, suggesting that its stock price is 2% more volatile than the S&P 500. Comparatively, Group 1 Automotive has a beta of 0.96, suggesting that its stock price is 4% less volatile than the S&P 500.
Institutional and Insider Ownership
88.7% of Advance Auto Parts shares are owned by institutional investors. Comparatively, 99.9% of Group 1 Automotive shares are owned by institutional investors. 0.8% of Advance Auto Parts shares are owned by company insiders. Comparatively, 2.4% of Group 1 Automotive shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.
Dividends
Advance Auto Parts pays an annual dividend of $1.00 per share and has a dividend yield of 2.1%. Group 1 Automotive pays an annual dividend of $2.20 per share and has a dividend yield of 0.8%. Advance Auto Parts pays out 73.0% of its earnings in the form of a dividend. Group 1 Automotive pays out 7.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Advance Auto Parts has increased its dividend for 1 consecutive years and Group 1 Automotive has increased its dividend for 2 consecutive years.
Summary
Group 1 Automotive beats Advance Auto Parts on 13 of the 17 factors compared between the two stocks.
About Advance Auto Parts
Advance Auto Parts, Inc. provides automotive replacement parts, accessories, batteries, and maintenance items for domestic and imported cars, vans, sport utility vehicles, and light and heavy duty trucks. The company offers battery accessories; belts and hoses; brakes and brake pads; chassis and climate control parts; clutches and drive shafts; engines and engine parts; exhaust systems and parts; hub assemblies; ignition components and wires; radiators and cooling parts; starters and alternators; and steering and alignment parts. It also offers air conditioning chemicals and accessories; air fresheners; antifreeze and washer fluids; electrical wires and fuses; electronics; floor mats, seat covers, and interior accessories; hand and specialty tools; lighting products; performance parts; sealants, adhesives, and compounds; tire repair accessories; vent shades, mirrors and exterior accessories; washes, waxes and cleaning supplies; and wiper blades. In addition, the company offers air filters; fuel and oil additives; fuel filters; grease and lubricants; motor oils; oil filters, part cleaners and treatments; and transmission fluids for engine maintenance. Further, it offers battery and wiper installation; engine light scanning and checking; electrical system testing, including batteries, starters, and alternators; oil and battery recycling; and loaner tool program services. Additionally, the company sells its products through its website. It serves professional installers and do-it-yourself customers. The company operates stores under the Advance Auto Parts and Carquest names, as well as branches under the Worldpac name. The company has stores in the United States, Puerto Rico, the U.S. Virgin Islands, and Canada; and independently owned Carquest branded stores in Mexico and various Caribbean Islands. Advance Auto Parts, Inc. was founded in 1929 and is based in Raleigh, North Carolina.
About Group 1 Automotive
Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry in the United States and the United Kingdom. The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services. Group 1 Automotive, Inc. was incorporated in 1995 and is headquartered in Houston, Texas.
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