Advance Auto Parts Inc Advance Auto Parts Inc W/I (AAP) Company Bio
Advance Auto Parts is an automotive aftermarket parts provider in the U.S., serves both the professional installer and do-it-yourself customers. The company was founded in 1929 and is based in Roanoke, Virginia.
AAP Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Advance Auto Parts Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Advance Auto Parts Inc ranked in the 53th percentile in terms of potential gain offered. Specifically, our DCF analysis implies the stock is trading below its fair value by an estimated 71.83%. The most interesting components of our discounted cash flow analysis for Advance Auto Parts Inc ended up being:
Interest coverage, a measure of earnings relative to interest payments, is 16.98 -- which is good for besting 81.46% of its peer stocks (US stocks in the Consumer Cyclical sector with positive cash flow).
Advance Auto Parts Inc's weighted average cost of capital (WACC) is 6%; for context, that number is higher than just 17.72% of tickers in our DCF set.
AAP's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than just 17.72% of tickers in our DCF set.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Cyclical that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as AAP, try ICON, ANF, GT, TSG, and DKS.