Advance Auto Parts (AAP) vs. O’Reilly Automotive (NASDAQ:ORLY) Head-To-Head Survey

Advance Auto Parts (NYSE: AAP) and O’Reilly Automotive (NASDAQ:ORLY) are both mid-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their valuation, institutional ownership, dividends, earnings, profitability, analyst recommendations and risk.

Risk & Volatility

Advance Auto Parts has a beta of 0.87, suggesting that its share price is 13% less volatile than the S&P 500. Comparatively, O’Reilly Automotive has a beta of 0.74, suggesting that its share price is 26% less volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Advance Auto Parts and O’Reilly Automotive, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
Advance Auto Parts 3 7 11 1 2.45
O’Reilly Automotive 0 11 7 1 2.47

Advance Auto Parts presently has a consensus target price of $123.12, indicating a potential upside of 32.02%. O’Reilly Automotive has a consensus target price of $240.11, indicating a potential upside of 21.32%. Given Advance Auto Parts’ higher possible upside, research analysts plainly believe Advance Auto Parts is more favorable than O’Reilly Automotive.

Earnings & Valuation

This table compares Advance Auto Parts and O’Reilly Automotive’s gross revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
Advance Auto Parts $9.49 billion 0.73 $960.52 million $5.00 18.65
O’Reilly Automotive $8.77 billion 1.99 $1.94 billion $11.42 17.33

O’Reilly Automotive has higher revenue, but lower earnings than Advance Auto Parts. O’Reilly 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.

Institutional and Insider Ownership

94.4% of O’Reilly Automotive shares are owned by institutional investors. 4.5% of Advance Auto Parts shares are owned by insiders. Comparatively, 3.1% of O’Reilly Automotive shares are owned by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Advance Auto Parts and O’Reilly Automotive’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
Advance Auto Parts 3.91% 14.71% 5.22%
O’Reilly Automotive 12.23% 72.22% 14.36%

Dividends

Advance Auto Parts pays an annual dividend of $0.24 per share and has a dividend yield of 0.3%. O’Reilly Automotive does not pay a dividend. Advance Auto Parts pays out 4.8% of its earnings in the form of a dividend.

Summary

O’Reilly Automotive beats Advance Auto Parts on 9 of the 16 factors compared between the two stocks.

About Advance Auto Parts

Advance Auto Parts, Inc. provides automotive aftermarket parts in North America, serving do-it-for-me (Professional) and do-it-yourself (DIY), customers. The Company’s stores and branches offer a selection of brand name, original equipment manufacturer (OEM) and private label automotive replacement parts, accessories, batteries and maintenance items for domestic and imported cars, vans, sport utility vehicles and light and heavy duty trucks. It serves through various channels ranging from traditional brick and mortar store locations to self-serving e-commerce sites. As of December 31, 2016, it operated 5,062 total stores and 127 branches primarily under the trade names Advance Auto Parts, Autopart International, Carquest and Worldpac. As of December 31, 2016, its Advance Auto Parts operations consisted of three geographic divisions, which included the operations of the stores operating under the Advance Auto Parts, Carquest and Autopart International trade names.

About O’Reilly Automotive

O’Reilly Automotive, Inc. is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States. The Company sells its products to both do-it-yourself (DIY) and professional service provider customers. The Company’s product line includes new and remanufactured automotive hard parts, such as alternators, starters, fuel pumps, water pumps, brake system components, batteries, belts, hoses, temperature control, chassis parts, driveline parts and engine parts; maintenance items, such as oil, antifreeze, fluids, filters, wiper blades, lighting, engine additives and appearance products, and accessories, such as floor mats, seat covers and truck accessories. The Company’s stores offer various services and programs to its customers, such as used oil, oil filter and battery recycling; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; custom hydraulic hoses, and machine shops.

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