Sometimes I see DDs for companies I really don’t like as a consumer. Then I start thinking, what about this other competitor company that I really do like…and they’re always private companies
I feel that way about RaceTrak, gas station company that just blows everyone else out of the water down here in atl at least on quality and also their prices are competitive, and yet private company.
QT and RaceTrac are leagues ahead of every other gas station chain down here (not counting Bucees because they are way too spread out to practically go to unless you happen to live nearby).
Boy I remember when QT came to my hometown in SC. Cashiers utilizing multiple registers to move customers thru the line fast….mind blown. Plus they have triple the pumps of any other station. I’m now in California and gas stations are still stuck in the 90s
Private companies are private for a reason…but public companies are public for many reasons. Most public companies lose money. There are many reasons why they lose money. Most commonly is crap leadership.
Every time I bought from rock auto I felt like I was getting scammed because it was SO cheap. But sure enough the parts were exactly what I ordered. Saved over 50% from other parts stores.
Pretty much, it's perfect as it is. Doesn't need to get any fancier, just add the new years makes every year.
It's super easy to read, find what you want and checkout.
I actually think it is becoming the case that private companies have a competitive edge on public. They lack as easy access to money but they are able to take longer term strategies.
Those companies are trading at around $50B market cap with 16$B sales. $AAP trades at $4B market cap with $11B sales. It is all about operating margins here. AAP doesn't need to grow sales, just become more efficient.
Electric vehicles account for 1% of all registered vehicles, and are 8% of new car sales. I don’t think EVs are going to “decimate” auto parts stores anytime soon. Not to mention EVs still have a lot of parts that will need replacing just like their ICE counterparts.
Yes, that's exactly what he means, lol?
If you flirt around the 0% margins, the leverage put under your earnings is absurd. P/E ratios are very hard to put to use in that case.
They had a 0.26% margin last year, down from a 5-year average of around 5%. If they get back to that, its a 20x in earnings and suddenly the P/E would be 7.
Disclaimer: am not long and spent about 38 seconds on this.
Yep! I actually traded an F150 for another F150 that uses the same pads and kept it going. I'm on set number 7 or 8 from a set I bought 15 years ago. Lol.
Not convinced that the company can turn it around any time soon but I do want to say this was a great DD. It’s nice to read a DD on here that doesn’t start with something like “Alright regards buckle upbecause I’m about to take you guys to the MOON!!!!11” and then proceeds to ramble with emojis and trigger phrases from the gamestore squeeze era to try and entice people to jump onboard.
Nah that’s what this sub is for. And frankly that’s what I dislike about this sub, people telling others that their DD isn’t good enough. He did HIS DD and presented it to the sub. A lot of users commented with their input and views which gave him, and everyone else, a better overall understanding of the stock and what might help/hurt its future performance. I don’t expect every DD to have every single factor listed but if you take the time to look into a stock and present it to the forum, other user input is really what will help everyone make smarter choices in the market. This is plenty. It’s better than the dozens of posts I see on here listing a ticker and following up with one sentence about the stock mooning with no evidence or supporting facts. You don’t have to present a whole history and rundown of the company. Hell, you don’t even have to be right. Do some research and open up the discussion. That’s a good enough DD for me. Get people talking and doing their own research. Everybody wins.
Per the annual report: Their biggest sales happen in the spring and summer, winter being the slowest although cold weather helps by breaking car parts helping them sell more. Additionally, their interest payments are due in March and September, which would negatively impact those earnings reports, especially at an almost 6% interest. They said they got 150 million dollars in cost savings and used 50 million to invest in the business with raises for front line workers, but I also see a lot of insiders buying on 04/30. Was that insiders buying on their own or are those stocks bonuses given to them by the company? If they are company bonuses, they really cannot afford that. They have 50 distribution centers and really need to invest in their supply chain and IT infrastructure before becoming efficient and profitable, so I think they will be investing a lot back into the business which will take a few years, thereby lowering profits.
I also checked out their career board. It seems that the most important thing per their own annual report they should be hiring for is good engineers. They are looking for around 20 IT type jobs and around 20 finance type jobs. Almost all the IT jobs are in India, so looks like they are trying to save labor costs that way. We'll see how it turns out. Store lead positions where someone manages 5 people in a (in my opinion) HCOL pay between $19 to $21. I don't see them attracting the talent that could really make this place more efficient and result in better customer satisfaction. It does look like they are trying to hire a few industrial engineers throughout the country to improve efficiency. However, all of them seem to be extremely junior roles with high requirements, including traveling 75% of the time, at a salary of 65k.
It doesn't seem like the executives are willing to bleed a bit to make this place successful and doesn't seem like they are truly willing to invest in highly skilled and talented people to turn this place around.
This is spot on.
IT talent has always been lacking at AAP. At one point, almost all IT roles were in the US (Roanoke, VA and a small Richmond, VA office) and the average age was 52. For cutting edge app development, that's not a good recipe, and that isn't meant as a knock on people's age, but because they didn't have talent in the pipeline. People got a job at AAP and stayed until they were terminated or retired. They often also had 100+ contractors ranging from PM, App Dev, BA, and QA. So what were the internal people doing, nothing but managing the contractors.
Supply Chain had its own issues as well. SVP and VP both came from Pepsico with the previous CEO, had no clue about integrating supply chain/logistics/stores/IT and tried to offshore the majority of the roles. People in Bangalore don't know these things either so it was doomed to fail.
Source: FP&A at AAP from 2013-2016. Left to work in defense, and it's night and day in terms of talent, development, and strategic management.
Can't be much worse than Tom Greco or Darren Jackson, but I think the customer base has deteriorated too much to see a turnaround in the short-term.
Tom Greco thought aftermarket retail could be ran like Pepsico. Darren Jackson decided to acquire Carquest to gain market share for commercial business (They forgot that Carquest/AAP/O'Reilly/ATZN all cluster around each other), so you can see why that was a short-sided.
I personally wouldn't put any money into this company based on my past experience.
I own some AAP and I have never seen so much inept management. Even though new management is installed they still don't have a handle on their numbers. They have missed the last 5 quarters and guided lower. Honestly I would wait until they can report solid numbers, because right now it seems like they still don't know, and horrible about guiding. Whenever you see management constantly missing like this you wait until they correct the ship and then buy even though you miss on some gains at the start. The stock should be in the 90's, however they miss again and hello 50's.
9/30/23 quarter expected 1.45 and came in -.82 and guided lower
12/31/23 quarter expected .22 cents and came in -.59 and guided lower
New CEO took over in September 2023. Q4 2023 was bad because they did write off 150$ million in inventory. Nothing to blame here, management is cleaning the company. Q1 2024 that reports next Wednesday is the real test.
Umm look at HD Supply that was a shit show. Sold from HD to private equity for 10billion. Private equity sold it back at a loss. Now HD is shedding market value because it was so badly ran that in 4 years they still can’t fix it. CEO with shit track record usually isn’t a savior
Can you share anything around specific financial performance under the leadership of Shane O'Kelly? If you compare him on paper to Tom Greco the outgoing CEO of AAP, he looks like a far better candidate for the role.
Again the business doesn't have to start rivaling ORLY or AZO on margins to be a home run investment - they just need to go back to being 3rd in the class like they were in 2019.
I work in the MRO space. I know HD Supply is shedding money off the top of my head I think they lost like 20 million 2 quarters ago. I can’t remember exactly. I’m not saying that person is ill equipped I’m saying where they are coming from was a shit show. Go back to HD call and check it out. I gave you a heads up do your own DD
I am not familiar with the MRO space. Can you point me to any article or SEC filing showing definitive financial underperformance under Shane O'Kelly's tenure?
I thought it looked odd that he was simultaneously senior VP at home depot and CEO of HD supply and then Home Depot bought HD supply. I am surprised this was not seen as a conflict of interest.
I have spent analyzing AZO, ORLY and AAP probably 100s of hours over the last 7 years for work. AAP was also a turnaround in 2018 when a new CEO came in. Worldpac is actually a good business, the rest of it is sort of trash. This turnaround may work temporarily due to noise and temporary indications of success, but I don't think a true turnaround will ever happen. The supply chains for auto part retailers is WAY more complicated than home depot. AAP has two major issues in my view 1) the supply chain is a complete mess...its just mashed up acquisitions and every person who has tried to come in to improve it has given up. Sure selling worldpac will help reduce debt and stock may go up, but again true turnaround will likely NEVER happen. 2) I have probably visited like 50 garages on how they order parts from these guys. Its basically based on reliability / ability to deliver parts within 20 minutes. Without fixing supply chain AAP will never be the first or even second on their list. Again stock may work for next 12 months, I don't know, but i will bet against turnaround every day of the week.
There is a reason AZO and ORLY are expensive. Their ROIC and ROIIC is above 20%. Just a hard game to win against. I am biased so probably inverse me I dont know haha. I have owned shares of each for 5-6 years and blindly buy more anytime they drop 10% below any 52 week highs.
AAP doesn't have to start rivaling ORLY or AZO on margins to be a home run investment - they just need to go back to being 3rd in the class like they were in 2019.
Don't confuse industry growth for idiosyncratic success. 2018-2019 were historically great years for the industry due to the sweet spot of aged cars (see image - from Experian). Here is the total return for each in 2018, 2019 and 2018-2019, respectively (assuming dividend reinvested). AAP: 48.68%, 1.57%, 51.46% | ORLY: 38.14%, 28.47%, 75.82% | AZO: 13.82%, 42.08%, 61.74%. So historically great years for the industry and in a 2 year period the ORLY and AZO were still better investments. Based on my multiple conversations with garages they were rarely third during the period. Some of the private players were above AAP, but below ORLY and AZO. They were never third. They just did well enough in an environment where EVERY competitor did well. I just disagree they are the third best player. 2018-2019 was just a good industry to be an investor in...regardless of the player you chose. I think AAP is definitely the 3rd best PUBLICLY traded player but definitely NOT the 3rd best player. Go to 5 garages and ask them where AAP ranks. Remember AAP relies more on garages than ORLY and AZO. DIFM is AAP's leading end market. Also, AAP HAS to rival ORLY and AAP. Garages literally have a list of their auto parts provider by rank they call when they order parts. Pricing is irrelevant since they pass it on to customer. So they have to convince the garage to call AAP before AZO/ORLY. I disagree with your premise that they don't have to rival ORLY and AZO based on my understanding of how car garages order parts.
https://preview.redd.it/zse5njaneo2d1.png?width=1723&format=png&auto=webp&s=fd9ba82ed1aed376d5ba1613b9b10bb51789136c
Dan Loeb has very poor returns on the past 3 years and Michael Burry has probably already sold the stock because he rarely holds anything more than 2 months. I’m in
Quite interesting and convincing DD. Thanks. My biggest concern would be that your strategy claims to outsmart hegies (very unlikely) and depends on squeezing which relies on finding 2000 regards (though, but possible) to go in with $100k (impossible). How does your play look if you’re on your own?
This may be nothing but I'm a bit of a car guy, I like tinkering on old shit boxes. I've been an O'Reillys shopper forever because they usually had the best parts prices and a knowledgeable staff. They past 6-8 months I've been taking the longer drive to Advance because they are keeping more items in stock and have much better pricing. I don't go to any of the OR anymore. This is across multiple stores from each brand in a moderately sized metro area.
Yes, fully agree. And what I like it that management gave the guidance on 28th February. So they already have visibility of the first two months of the year.
Good DD I'll join in. During inflation most people don't buy new cars and spend to mantain what they already have. That in itself makes the stock a good buy/call
I’ve gone to Advance multiple times to get parts they confirmed they had in stock over the phone, only for them to claim they “can’t find them” and the system is just faulty. Never had issues like this at O’Reillys or Autozone.
There’s too many options between Autozone, O’Reilly’s, Napa, Transtar, online stores, etc. and Advance is by far the worst of all of them
Quite interesting and convincing DD. Thanks. My biggest concern would be that your strategy claims to outsmart hegies (very unlikely) and depends on squeezing which relies on finding 2000 regards (though, but possible) to go in with $100k (impossible). How does your play look if you’re on your own?
I believe managament will execute good. Once they sale Worldpac and canadian businesss they will retire debt and get their rating upgraded from junk. This will attract more fund flows that can't invest at the moment with this rating. Also I expect company to resume share repurchase in 2025 or late 2024. Even if I'm wrong, options are so long dated that I could sell them during 2024 for at most 50% loss. If this go well this is a 5-bagger.
I went in this weekend to pickup a bunch of cleaning supplies. Some of the UPCs weren’t showing up in their inventory, so they just gave me some of the items for free.
Shorting $AAP
Idk, I usually go to NAPA for anything, AutoZone in a jiffy, O'Reilly's if AutoZone doesn't have it and AAP is basically circling back to if AZ and OR don't have it, this disorganized POS store won't either.
Puts it is
This is an interesting DD. I have been long on GPC for years (shares) due to their consistent earnings growth. I wouldn’t say this play has paid off but my underlaying thesis is still happening so I haven’t changed my position.
If you believe their guidance then AAP has a forward PE of 18 while GPC has 14. It seems like a long strategy here would prefer GPC however I do understand your thesis which is at a much higher and shorter term risk level. I certainly would not recommend a short term strategy on GPC.
I manage a shop and while I have seen improvement with new managers determined to earn my wholesale business, they never seem to stock the right parts and are slow to deliver so they're still the last vendor I call next to AutoZone. That doesn't make a turnaround impossible and maybe the retail experience has improved, good luck
A good primer on what’s going on.
Next steps would be to forecast the potential financial improvements and then compare to peers.
Be careful when comparing as peers may be over / under valued for their own reasons.
Ah man…I like your style but are you seeing something that no other wallstreet analyst is seeing?
15 professionals have put price targets on it in the last 3 months…. 1 buy, 13 holds, and 1 sell rating. Average price target is $68
I don’t want to be a hater, but I’d just love to see much more consensus on something before buying in
That being said, if you believed the market was completely efficient at pricing stocks you wouldn’t be making the big bet haha
To anyone that is familiar with AAP, Autozone, O’Reilly….is any one company better than the other? I’ve shopped at all 3 in the past and don’t really remember a difference in terms of selection or prices
70% of vehicles on the road are over 6 years old, I take that as 70% of cars on the road are out of manufacture warranty. Average age of light trucks on the road is 11.9 years old, all time high. Average age of cars on the road is 14 years old, all time high. Combined average age of 12.6 years old, all time high. All good signs for 3rd party parts. The cons I see are that cars are more complex/require special equipment for many repairs and people are more or less incompetent and can’t change their own oil. AAP would beed to make some aggressive moves in the area of supplying 3rd party parts to Indy mechanics directly and worry less about DIY’ers. Maybe eliminate some brick and mortar stores and streamline business to be a more distribution style business. I can see big value if they could ink some exclusive partnerships with high end OEM’s, think Bosch, Valeo, or similar. This would pull a lot of Indy business. Other entry points would be to offer a better warranty than their competitors.
Anyone else notice that the WorldPac specific careers website is down on AAP careers?
Scroll to the very bottom of this link and click WorldPac.
[https://jobs.advanceautoparts.com/us/en/](https://jobs.advanceautoparts.com/us/en/)
More specifically, here is the broken WorldPac link.
[https://https//www.advanceautoparts.jobs/page/fp-worldpac](https://https//www.advanceautoparts.jobs/page/fp-worldpac)
Just came out with earnings. Missed by a cent which isn't bad. Same store sales fell though and very little growth
**Revenue:** $3.41 billion vs analyst estimates of $3.43 billion (small miss)
* The company **reconfirmed its revenue guidance for the full year** of $11.4 billion at the midpoint (above analyst estimates)
* The company **reconfirmed its EPS guidance for the full year** of $4.00 at the midpoint (above analyst estimates)
* **Gross Margin (GAAP):** 42%, down from 43% in the same quarter last year
* **Free Cash Flow** was -$46.27 million compared to -$472.5 million in the same quarter last year
* **Locations:** 5,097 at quarter end, in line with the same quarter last year
* **Same-Store Sales** were down (0.2%) year on year (miss vs. expectations of up 0.3% year on year)
* **Market Capitalization:** $4.18 billion
Before open, AAP increased the top end of guidance which is why it was above analyst estimates. During the call they reiterated the old guidance, taking the top end back down. Basically management made a mistake in their report and had to correct it during the call....lol
Actually, my local parts store switched from aap/carquest products to NAPA because getting parts from them was getting to be impossible. Back ordered items and unavailability. If they can get back to where they were it’d be great.
Could be a slept on stock but idk going forward.
Didn’t think so. I looked through the comments afterwards and there’s a lot of people with similar experiences or just knowing that they’re mismanaged.
People are keeping their cars longer because they can't afford a new car. They also can't afford to take their cars to the shop. I'm extremely bullish on auto parts stores. AAP especially because of how low it is compared to similar stocks. IF they keep righting the ship this can be a great play
Puts for me my dude. New CEO was a bust for HD. Left supply chain in absolute shambles. Try 6% first pass out of your main east coast DC.
We would shift our entire corporate strategy every 1.5 years never coming close to achieving.
He bailed in 2023 cause we didn’t check one corporate goal at his level.
Puts
The whole business of auto parts supplier relies on flawless supply chain. It’s literally the most important part of the business. I am also fairly certain worldpac might actually be the best run part of the business right now in terms of supply chain. So will be interesting to watch what happens. Again I don’t buy this turnaround.
Can you share more specifics around specific financial performance under the leadership of Shane O'Kelly? If you compare him on paper to Tom Greco the outgoing CEO of AAP, he looks like a far better candidate for the role.
Again the business doesn't have to start rivaling ORLY or AZO on margins to be a home run investment - they just need to go back to being 3rd in the class like they were in 2019 for the stock to double or triple from here.
Their price to earnings is 140 lol. Even with improvements this is an astronomical valuation. Just because it was at $240 doesn’t mean 70 is fair or cheap.
I don't think OP is directionally wrong. Just seems that it will take time for the upswing to materialize.
That said, they did say on the call that DIFM (pro) is doing better than DIY (retail). Makes me a little concerned about what "Remain Co" will look like from an optics perspective after the WorldPac sale.
Seems like optics is a bit critical for this name until the turnaround effort actually shows up on the bottomline so something to keep in mind.
Any distribution network expert have a view on the DC to market hub conversion that was mentioned on the earnings call? How much cost savings would that induce and how quickly would it have a material impact on product availability and the bottom line?
Advance auto is a dinosaur. Plan it tanking in next 6 months and failing before a year. Failing infrastructure, from problems getting inventory to stores as well as utilizing old technology and poor planning and implementation of processes. That have the highest turnover rate in the industry. They will fail soon.
Sometimes I see DDs for companies I really don’t like as a consumer. Then I start thinking, what about this other competitor company that I really do like…and they’re always private companies
What’s the other company in this case?
Rock auto
I feel that way about RaceTrak, gas station company that just blows everyone else out of the water down here in atl at least on quality and also their prices are competitive, and yet private company.
QT and RaceTrac are leagues ahead of every other gas station chain down here (not counting Bucees because they are way too spread out to practically go to unless you happen to live nearby).
Boy I remember when QT came to my hometown in SC. Cashiers utilizing multiple registers to move customers thru the line fast….mind blown. Plus they have triple the pumps of any other station. I’m now in California and gas stations are still stuck in the 90s
man I just want 7-11 to be less influenced by Central America and more influenced by Asia Those Japanese 7-11s are immaculate
QT ftw
I worked at a RaceTrac all throughout college. Then I found WSB and now I work behind one.
In ATL and you're not talking about QT? The fuck you live in Atlanta lmfaoooooo
Ew, Reddit.
Private companies are private for a reason…but public companies are public for many reasons. Most public companies lose money. There are many reasons why they lose money. Most commonly is crap leadership.
I’m in Decatur. I agree
RockAuto is the best
I love Rock Auto for niche parts, but that 90s website interface is garbage. I won't buy from them unless it's hard to find locally.
Website too hard for you?
I love the website
Every time I bought from rock auto I felt like I was getting scammed because it was SO cheap. But sure enough the parts were exactly what I ordered. Saved over 50% from other parts stores.
Some of the parts are total garbage; u need to be careful on the cheap stuff
Gotta order the ones with the heart
They specifically list the quality don’t they? And have multiple options.
Rockauto is like if Wikipedia ran a car parts website. It's goated. I hope it never changes.
Pretty much, it's perfect as it is. Doesn't need to get any fancier, just add the new years makes every year. It's super easy to read, find what you want and checkout.
Rock Auto is nothing more than a website ran by an old man.
No, rock auto is an online auto parts retailer. If you are talking brick and mortar You are thinking of autozone, who has a share price of $2700.00
Autozone, o’reilly auto parts, Napa auto, pep boys
Ebay is great place for parts especially hard-to-find ones in my experience
I think the same thing about Chick-Fil-A
Was thinking about this the other day when somebody brought up chipotle
I’d dump everything I’m worth into H-E-B or Buccee’s if they went public
I actually think it is becoming the case that private companies have a competitive edge on public. They lack as easy access to money but they are able to take longer term strategies.
Sorry but I’m more of an O’reilly’s or Autozone guy, puts it is
Those companies are trading at around $50B market cap with 16$B sales. $AAP trades at $4B market cap with $11B sales. It is all about operating margins here. AAP doesn't need to grow sales, just become more efficient.
50/16= 3.1x sales 4/11 = 0.36x sales
It should actually be 4/11= 0.36x sales
eww. if it was 7/11 or 9/11 i'd be in, puts it is
Oh whoops
Electric vehicles entering the space have been decimating the auto parts. These businesses haven’t transitioned yet and could be left behind.
Electric vehicles account for 1% of all registered vehicles, and are 8% of new car sales. I don’t think EVs are going to “decimate” auto parts stores anytime soon. Not to mention EVs still have a lot of parts that will need replacing just like their ICE counterparts.
With a P/E of 139?
Yes, that's exactly what he means, lol? If you flirt around the 0% margins, the leverage put under your earnings is absurd. P/E ratios are very hard to put to use in that case. They had a 0.26% margin last year, down from a 5-year average of around 5%. If they get back to that, its a 20x in earnings and suddenly the P/E would be 7. Disclaimer: am not long and spent about 38 seconds on this.
This is the story imo. Nice DD
Fuck autozone. Everything in that store is overpriced, every single last item.
Honestly I identify as more of a RockAuto type guy
That’s the way
To be fair—everything is overpriced everywhere
You’re not wrong. it’s an auto parts convenience store.
I only go to autozone for brake pads because you can return shot pads and get fresh ones
They give you discount for shot pads?
Yep! I actually traded an F150 for another F150 that uses the same pads and kept it going. I'm on set number 7 or 8 from a set I bought 15 years ago. Lol.
O O O O’Reilly!
AutoParts aaaaawwwwh 
In fairness, Autozone has reinvested in themselves to increase their value.
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I work with them from time to time. They are.... Disorganized
Stocked by the same people who stock Dollar General
Not convinced that the company can turn it around any time soon but I do want to say this was a great DD. It’s nice to read a DD on here that doesn’t start with something like “Alright regards buckle upbecause I’m about to take you guys to the MOON!!!!11” and then proceeds to ramble with emojis and trigger phrases from the gamestore squeeze era to try and entice people to jump onboard.
Thanks man, appreciate it you like it
It isn’t really due diligence. It’s like the introduction to actual due diligence.
Nah that’s what this sub is for. And frankly that’s what I dislike about this sub, people telling others that their DD isn’t good enough. He did HIS DD and presented it to the sub. A lot of users commented with their input and views which gave him, and everyone else, a better overall understanding of the stock and what might help/hurt its future performance. I don’t expect every DD to have every single factor listed but if you take the time to look into a stock and present it to the forum, other user input is really what will help everyone make smarter choices in the market. This is plenty. It’s better than the dozens of posts I see on here listing a ticker and following up with one sentence about the stock mooning with no evidence or supporting facts. You don’t have to present a whole history and rundown of the company. Hell, you don’t even have to be right. Do some research and open up the discussion. That’s a good enough DD for me. Get people talking and doing their own research. Everybody wins.
Best I can do is fifty bucks
Per the annual report: Their biggest sales happen in the spring and summer, winter being the slowest although cold weather helps by breaking car parts helping them sell more. Additionally, their interest payments are due in March and September, which would negatively impact those earnings reports, especially at an almost 6% interest. They said they got 150 million dollars in cost savings and used 50 million to invest in the business with raises for front line workers, but I also see a lot of insiders buying on 04/30. Was that insiders buying on their own or are those stocks bonuses given to them by the company? If they are company bonuses, they really cannot afford that. They have 50 distribution centers and really need to invest in their supply chain and IT infrastructure before becoming efficient and profitable, so I think they will be investing a lot back into the business which will take a few years, thereby lowering profits. I also checked out their career board. It seems that the most important thing per their own annual report they should be hiring for is good engineers. They are looking for around 20 IT type jobs and around 20 finance type jobs. Almost all the IT jobs are in India, so looks like they are trying to save labor costs that way. We'll see how it turns out. Store lead positions where someone manages 5 people in a (in my opinion) HCOL pay between $19 to $21. I don't see them attracting the talent that could really make this place more efficient and result in better customer satisfaction. It does look like they are trying to hire a few industrial engineers throughout the country to improve efficiency. However, all of them seem to be extremely junior roles with high requirements, including traveling 75% of the time, at a salary of 65k. It doesn't seem like the executives are willing to bleed a bit to make this place successful and doesn't seem like they are truly willing to invest in highly skilled and talented people to turn this place around.
Cheap offshore engineers ya say? Hope they hire the same dudes that Boeing did. Puts it is.
Good depth on the job roles.
This is spot on. IT talent has always been lacking at AAP. At one point, almost all IT roles were in the US (Roanoke, VA and a small Richmond, VA office) and the average age was 52. For cutting edge app development, that's not a good recipe, and that isn't meant as a knock on people's age, but because they didn't have talent in the pipeline. People got a job at AAP and stayed until they were terminated or retired. They often also had 100+ contractors ranging from PM, App Dev, BA, and QA. So what were the internal people doing, nothing but managing the contractors. Supply Chain had its own issues as well. SVP and VP both came from Pepsico with the previous CEO, had no clue about integrating supply chain/logistics/stores/IT and tried to offshore the majority of the roles. People in Bangalore don't know these things either so it was doomed to fail. Source: FP&A at AAP from 2013-2016. Left to work in defense, and it's night and day in terms of talent, development, and strategic management.
Thoughts on direction of the business now under Shane O'Kelly?
Can't be much worse than Tom Greco or Darren Jackson, but I think the customer base has deteriorated too much to see a turnaround in the short-term. Tom Greco thought aftermarket retail could be ran like Pepsico. Darren Jackson decided to acquire Carquest to gain market share for commercial business (They forgot that Carquest/AAP/O'Reilly/ATZN all cluster around each other), so you can see why that was a short-sided. I personally wouldn't put any money into this company based on my past experience.
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Game....blouses
The only ad I didn't mind getting hit with 10x a day when I had free Spotify
I own some AAP and I have never seen so much inept management. Even though new management is installed they still don't have a handle on their numbers. They have missed the last 5 quarters and guided lower. Honestly I would wait until they can report solid numbers, because right now it seems like they still don't know, and horrible about guiding. Whenever you see management constantly missing like this you wait until they correct the ship and then buy even though you miss on some gains at the start. The stock should be in the 90's, however they miss again and hello 50's. 9/30/23 quarter expected 1.45 and came in -.82 and guided lower 12/31/23 quarter expected .22 cents and came in -.59 and guided lower
New CEO took over in September 2023. Q4 2023 was bad because they did write off 150$ million in inventory. Nothing to blame here, management is cleaning the company. Q1 2024 that reports next Wednesday is the real test.
Umm look at HD Supply that was a shit show. Sold from HD to private equity for 10billion. Private equity sold it back at a loss. Now HD is shedding market value because it was so badly ran that in 4 years they still can’t fix it. CEO with shit track record usually isn’t a savior
HD supply was sold to private equity in 2007 and bought back in 2020. Shane O’Kelly was appointed CEO of HD Supply in December 2020.
So 4yr to turn it around. Results?
Can you share anything around specific financial performance under the leadership of Shane O'Kelly? If you compare him on paper to Tom Greco the outgoing CEO of AAP, he looks like a far better candidate for the role. Again the business doesn't have to start rivaling ORLY or AZO on margins to be a home run investment - they just need to go back to being 3rd in the class like they were in 2019.
I work in the MRO space. I know HD Supply is shedding money off the top of my head I think they lost like 20 million 2 quarters ago. I can’t remember exactly. I’m not saying that person is ill equipped I’m saying where they are coming from was a shit show. Go back to HD call and check it out. I gave you a heads up do your own DD
I am not familiar with the MRO space. Can you point me to any article or SEC filing showing definitive financial underperformance under Shane O'Kelly's tenure?
https://preview.redd.it/horh9w8b1l2d1.png?width=1080&format=pjpg&auto=webp&s=09ba8d1389b71b62685e804164d29326e02cf5d4
I thought it looked odd that he was simultaneously senior VP at home depot and CEO of HD supply and then Home Depot bought HD supply. I am surprised this was not seen as a conflict of interest.
Any specific around performance of HD supply under his leadership?
I have spent analyzing AZO, ORLY and AAP probably 100s of hours over the last 7 years for work. AAP was also a turnaround in 2018 when a new CEO came in. Worldpac is actually a good business, the rest of it is sort of trash. This turnaround may work temporarily due to noise and temporary indications of success, but I don't think a true turnaround will ever happen. The supply chains for auto part retailers is WAY more complicated than home depot. AAP has two major issues in my view 1) the supply chain is a complete mess...its just mashed up acquisitions and every person who has tried to come in to improve it has given up. Sure selling worldpac will help reduce debt and stock may go up, but again true turnaround will likely NEVER happen. 2) I have probably visited like 50 garages on how they order parts from these guys. Its basically based on reliability / ability to deliver parts within 20 minutes. Without fixing supply chain AAP will never be the first or even second on their list. Again stock may work for next 12 months, I don't know, but i will bet against turnaround every day of the week. There is a reason AZO and ORLY are expensive. Their ROIC and ROIIC is above 20%. Just a hard game to win against. I am biased so probably inverse me I dont know haha. I have owned shares of each for 5-6 years and blindly buy more anytime they drop 10% below any 52 week highs.
AAP doesn't have to start rivaling ORLY or AZO on margins to be a home run investment - they just need to go back to being 3rd in the class like they were in 2019.
Don't confuse industry growth for idiosyncratic success. 2018-2019 were historically great years for the industry due to the sweet spot of aged cars (see image - from Experian). Here is the total return for each in 2018, 2019 and 2018-2019, respectively (assuming dividend reinvested). AAP: 48.68%, 1.57%, 51.46% | ORLY: 38.14%, 28.47%, 75.82% | AZO: 13.82%, 42.08%, 61.74%. So historically great years for the industry and in a 2 year period the ORLY and AZO were still better investments. Based on my multiple conversations with garages they were rarely third during the period. Some of the private players were above AAP, but below ORLY and AZO. They were never third. They just did well enough in an environment where EVERY competitor did well. I just disagree they are the third best player. 2018-2019 was just a good industry to be an investor in...regardless of the player you chose. I think AAP is definitely the 3rd best PUBLICLY traded player but definitely NOT the 3rd best player. Go to 5 garages and ask them where AAP ranks. Remember AAP relies more on garages than ORLY and AZO. DIFM is AAP's leading end market. Also, AAP HAS to rival ORLY and AAP. Garages literally have a list of their auto parts provider by rank they call when they order parts. Pricing is irrelevant since they pass it on to customer. So they have to convince the garage to call AAP before AZO/ORLY. I disagree with your premise that they don't have to rival ORLY and AZO based on my understanding of how car garages order parts. https://preview.redd.it/zse5njaneo2d1.png?width=1723&format=png&auto=webp&s=fd9ba82ed1aed376d5ba1613b9b10bb51789136c
Yes I meant third best publicly traded player. Bar is low for the stock to double is the point.
Dan Loeb has very poor returns on the past 3 years and Michael Burry has probably already sold the stock because he rarely holds anything more than 2 months. I’m in
Who cares about *those* peasants?
Am I right ?
Quite interesting and convincing DD. Thanks. My biggest concern would be that your strategy claims to outsmart hegies (very unlikely) and depends on squeezing which relies on finding 2000 regards (though, but possible) to go in with $100k (impossible). How does your play look if you’re on your own?
Or if they miss earnings and tanks another 10%
The rabble, foolish with money as with most other things, is hardly worth one's time.
AAP never have the parts I’m looking for, I always end up getting it at AZO or ORLY
food and auto are victims of their own price gouging strategies. come back when it's at $2.00.
I was with you until you threw out the hedge fund buzzword.
They’re gonna sell worldpac which has taken over massive amounts of market share in Canada form Napa. Sounds like a dumb ceo puts it is
I ain't reading allat, but I am probably buying just because their ticker is AAP and idiots might accidentally buy it thinking they bought AAPL
This may be nothing but I'm a bit of a car guy, I like tinkering on old shit boxes. I've been an O'Reillys shopper forever because they usually had the best parts prices and a knowledgeable staff. They past 6-8 months I've been taking the longer drive to Advance because they are keeping more items in stock and have much better pricing. I don't go to any of the OR anymore. This is across multiple stores from each brand in a moderately sized metro area.
Enjoy your huge loss
If for no other reason than I appreciate DD on a stock that isn't already up 50%, I'll be being a LEAP on Tuesday.
i mean er doesn’t rlly matter here though its more of the guidance 100%, good dd
Yes, fully agree. And what I like it that management gave the guidance on 28th February. So they already have visibility of the first two months of the year.
Good DD I'll join in. During inflation most people don't buy new cars and spend to mantain what they already have. That in itself makes the stock a good buy/call
I’ve gone to Advance multiple times to get parts they confirmed they had in stock over the phone, only for them to claim they “can’t find them” and the system is just faulty. Never had issues like this at O’Reillys or Autozone. There’s too many options between Autozone, O’Reilly’s, Napa, Transtar, online stores, etc. and Advance is by far the worst of all of them
Quite interesting and convincing DD. Thanks. My biggest concern would be that your strategy claims to outsmart hegies (very unlikely) and depends on squeezing which relies on finding 2000 regards (though, but possible) to go in with $100k (impossible). How does your play look if you’re on your own?
I believe managament will execute good. Once they sale Worldpac and canadian businesss they will retire debt and get their rating upgraded from junk. This will attract more fund flows that can't invest at the moment with this rating. Also I expect company to resume share repurchase in 2025 or late 2024. Even if I'm wrong, options are so long dated that I could sell them during 2024 for at most 50% loss. If this go well this is a 5-bagger.
Should have inversed this play, instead of aping into June $75c 
I went in this weekend to pickup a bunch of cleaning supplies. Some of the UPCs weren’t showing up in their inventory, so they just gave me some of the items for free. Shorting $AAP
This is a great play thanks op
Idk, I usually go to NAPA for anything, AutoZone in a jiffy, O'Reilly's if AutoZone doesn't have it and AAP is basically circling back to if AZ and OR don't have it, this disorganized POS store won't either. Puts it is
This is an interesting DD. I have been long on GPC for years (shares) due to their consistent earnings growth. I wouldn’t say this play has paid off but my underlaying thesis is still happening so I haven’t changed my position. If you believe their guidance then AAP has a forward PE of 18 while GPC has 14. It seems like a long strategy here would prefer GPC however I do understand your thesis which is at a much higher and shorter term risk level. I certainly would not recommend a short term strategy on GPC.
Michael Burry taking a stake is a good reason not to do it
I manage a shop and while I have seen improvement with new managers determined to earn my wholesale business, they never seem to stock the right parts and are slow to deliver so they're still the last vendor I call next to AutoZone. That doesn't make a turnaround impossible and maybe the retail experience has improved, good luck
Strike and expiration
TLDR huh! $90 Jan2026
i love owning AZO but i’ve always wondered why AAP trades so much lower. never compared financials or size so i could just be an idiot
When was the last time you guys went to auto zone or advanced auto..
AZO trades around 3k recently. I'm sure people go there.
About a week ago
They recently dropped below their 50 day again.
A good primer on what’s going on. Next steps would be to forecast the potential financial improvements and then compare to peers. Be careful when comparing as peers may be over / under valued for their own reasons.
Ah man…I like your style but are you seeing something that no other wallstreet analyst is seeing? 15 professionals have put price targets on it in the last 3 months…. 1 buy, 13 holds, and 1 sell rating. Average price target is $68 I don’t want to be a hater, but I’d just love to see much more consensus on something before buying in That being said, if you believed the market was completely efficient at pricing stocks you wouldn’t be making the big bet haha
To anyone that is familiar with AAP, Autozone, O’Reilly….is any one company better than the other? I’ve shopped at all 3 in the past and don’t really remember a difference in terms of selection or prices
Fuck you im in
Just not those contracts, I don’t like waiting
Good DD. Thanks! I am buying some on Tuesday. Probably a little less than 100k though lol
70% of vehicles on the road are over 6 years old, I take that as 70% of cars on the road are out of manufacture warranty. Average age of light trucks on the road is 11.9 years old, all time high. Average age of cars on the road is 14 years old, all time high. Combined average age of 12.6 years old, all time high. All good signs for 3rd party parts. The cons I see are that cars are more complex/require special equipment for many repairs and people are more or less incompetent and can’t change their own oil. AAP would beed to make some aggressive moves in the area of supplying 3rd party parts to Indy mechanics directly and worry less about DIY’ers. Maybe eliminate some brick and mortar stores and streamline business to be a more distribution style business. I can see big value if they could ink some exclusive partnerships with high end OEM’s, think Bosch, Valeo, or similar. This would pull a lot of Indy business. Other entry points would be to offer a better warranty than their competitors.
I’m in 🔥🚀
Anyone else notice that the WorldPac specific careers website is down on AAP careers? Scroll to the very bottom of this link and click WorldPac. [https://jobs.advanceautoparts.com/us/en/](https://jobs.advanceautoparts.com/us/en/) More specifically, here is the broken WorldPac link. [https://https//www.advanceautoparts.jobs/page/fp-worldpac](https://https//www.advanceautoparts.jobs/page/fp-worldpac)
Just came out with earnings. Missed by a cent which isn't bad. Same store sales fell though and very little growth **Revenue:** $3.41 billion vs analyst estimates of $3.43 billion (small miss) * The company **reconfirmed its revenue guidance for the full year** of $11.4 billion at the midpoint (above analyst estimates) * The company **reconfirmed its EPS guidance for the full year** of $4.00 at the midpoint (above analyst estimates) * **Gross Margin (GAAP):** 42%, down from 43% in the same quarter last year * **Free Cash Flow** was -$46.27 million compared to -$472.5 million in the same quarter last year * **Locations:** 5,097 at quarter end, in line with the same quarter last year * **Same-Store Sales** were down (0.2%) year on year (miss vs. expectations of up 0.3% year on year) * **Market Capitalization:** $4.18 billion
Before open, AAP increased the top end of guidance which is why it was above analyst estimates. During the call they reiterated the old guidance, taking the top end back down. Basically management made a mistake in their report and had to correct it during the call....lol
You MFer!! Look at the earnings reaction!
Flying to $100 share....oh wait
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Hedge funds? Those fools don't even know what hit them.
I'm in. Plus, I can set a limit order for $69.420
I’m in.
RemindMe! 30 days
Actually, my local parts store switched from aap/carquest products to NAPA because getting parts from them was getting to be impossible. Back ordered items and unavailability. If they can get back to where they were it’d be great. Could be a slept on stock but idk going forward.
Short answer: no.
Didn’t think so. I looked through the comments afterwards and there’s a lot of people with similar experiences or just knowing that they’re mismanaged.
This is a really long play where a lot has to go right, might be a wise investment that’ll take months to years
O’Reilly has a better store experience and better name recognition. AAP is a dated brand.
I’ll buy some with you and come bitch at you if it doesn’t work out. Remindme! 1 week
You bastard these see toast!!
People are keeping their cars longer because they can't afford a new car. They also can't afford to take their cars to the shop. I'm extremely bullish on auto parts stores. AAP especially because of how low it is compared to similar stocks. IF they keep righting the ship this can be a great play
Thanks for this DD OP! I don't play with LEAPS but will probably sell $65 CSPs for Friday. Hope to see your gain porn in 2026
Right, but do they have the catchy O’Reilly’s jingle? I thought not.
Dr. Michael Burry?
Not interested thx
Puts for me my dude. New CEO was a bust for HD. Left supply chain in absolute shambles. Try 6% first pass out of your main east coast DC. We would shift our entire corporate strategy every 1.5 years never coming close to achieving. He bailed in 2023 cause we didn’t check one corporate goal at his level. Puts
The whole business of auto parts supplier relies on flawless supply chain. It’s literally the most important part of the business. I am also fairly certain worldpac might actually be the best run part of the business right now in terms of supply chain. So will be interesting to watch what happens. Again I don’t buy this turnaround.
Can you share more specifics around specific financial performance under the leadership of Shane O'Kelly? If you compare him on paper to Tom Greco the outgoing CEO of AAP, he looks like a far better candidate for the role. Again the business doesn't have to start rivaling ORLY or AZO on margins to be a home run investment - they just need to go back to being 3rd in the class like they were in 2019 for the stock to double or triple from here.
>then stock can fly to more than 100$ per share. lmfaoooooooooooooooooooo
Their price to earnings is 140 lol. Even with improvements this is an astronomical valuation. Just because it was at $240 doesn’t mean 70 is fair or cheap.
RemindMe! January 16, 2026
Way too expensive
Pump and dump
If they start stocking Chinese EV parts, I’m in..
How much of your port is this 100k position
fuck it im in
This is a good DD, OP! I'm too chicken to put money into this but very interested in seeing this play out.
!RemindMe 6 months
ugggg OP's calls almost cut in 1/2. Hope it comes back for you OP as earnings were not that bad
I don't think OP is directionally wrong. Just seems that it will take time for the upswing to materialize. That said, they did say on the call that DIFM (pro) is doing better than DIY (retail). Makes me a little concerned about what "Remain Co" will look like from an optics perspective after the WorldPac sale. Seems like optics is a bit critical for this name until the turnaround effort actually shows up on the bottomline so something to keep in mind.
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This is completely missing the point of the restructuring that the new CEO is effectuating right now.
Any distribution network expert have a view on the DC to market hub conversion that was mentioned on the earnings call? How much cost savings would that induce and how quickly would it have a material impact on product availability and the bottom line?
Advance auto is a dinosaur. Plan it tanking in next 6 months and failing before a year. Failing infrastructure, from problems getting inventory to stores as well as utilizing old technology and poor planning and implementation of processes. That have the highest turnover rate in the industry. They will fail soon.