Advance Auto Parts (NYSE:AAP – Get Free Report) and Sally Beauty (NYSE:SBH – Get Free Report) are both consumer discretionary companies, but which is the superior stock? We will contrast the two businesses based on the strength of their dividends, risk, institutional ownership, earnings, profitability, valuation and analyst recommendations.
Volatility and Risk
Advance Auto Parts has a beta of 1.01, indicating that its stock price is 1% more volatile than the S&P 500. Comparatively, Sally Beauty has a beta of 1.05, indicating that its stock price is 5% more volatile than the S&P 500.
Earnings and Valuation
This table compares Advance Auto Parts and Sally Beauty”s revenue, earnings per share and valuation.
| Gross Revenue | Price/Sales Ratio | Net Income | Earnings Per Share | Price/Earnings Ratio | |
| Advance Auto Parts | $8.60 billion | 0.30 | $44.00 million | $1.37 | 31.61 |
| Sally Beauty | $3.70 billion | 0.40 | $195.88 million | $1.92 | 8.22 |
Sally Beauty has lower revenue, but higher earnings than Advance Auto Parts. Sally Beauty 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 Sally Beauty’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% |
| Sally Beauty | 5.16% | 24.36% | 7.07% |
Analyst Ratings
This is a breakdown of current ratings and price targets for Advance Auto Parts and Sally Beauty, as reported by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Advance Auto Parts | 1 | 18 | 2 | 0 | 2.05 |
| Sally Beauty | 1 | 3 | 3 | 0 | 2.29 |
Advance Auto Parts presently has a consensus price target of $50.19, suggesting a potential upside of 15.88%. Sally Beauty has a consensus price target of $17.40, suggesting a potential upside of 10.21%. Given Advance Auto Parts’ higher possible upside, analysts clearly believe Advance Auto Parts is more favorable than Sally Beauty.
Institutional and Insider Ownership
88.7% of Advance Auto Parts shares are owned by institutional investors. 0.8% of Advance Auto Parts shares are owned by company insiders. Comparatively, 2.0% of Sally Beauty shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.
Summary
Sally Beauty beats Advance Auto Parts on 10 of the 14 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 Sally Beauty
Sally Beauty Holdings, Inc. operates as a specialty retailer and distributor of professional beauty supplies. The company operates through two segments, Sally Beauty Supply and Beauty Systems Group. The Sally Beauty Supply segment offers beauty products, including hair color and care products, skin and nail care products, styling tools, and other beauty products for retail customers, salons, and salon professionals. This segment also provides products under Wella and L'Oreal brands. The Beauty Systems Group segment offers professional beauty products, such as hair color and care products, skin and nail care products, styling tools, and other beauty items directly to salons and salon professionals through its professional-only stores, e-commerce platforms, and sales force, as well as through franchised stores under the Armstrong McCall store name. This segment also sells products under Paul Mitchell and Wella brands. It operates stores and franchised units in the United States, Puerto Rico, Canada, Mexico, Chile, Peru, the United Kingdom, Ireland, Belgium, France, the Netherlands, Spain, and Germany. The company distributes its products through full-service/exclusive distributors and open-line distributors. Sally Beauty Holdings, Inc. was founded in 1964 and is headquartered in Denton, Texas.
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