The Auto-Parts retailer stocks have fallen off the cliff. The shares of Advance Auto Parts, Inc. (NYSE:AAP), O’Reilly Automotive Inc. (NASDAQ:ORLY), and AutoZone, Inc. (NYSE:AZO) have all declined about 38% in the last 12 months.
Either the industry is attractive or they’re experiencing some trouble. O’Reilly and AutoZone have maintained operating margins of above 19%, while Advance Auto’s has slipped 7.3% as it digests its last acquisition.
AutoZone takes the lead with annual revenue of nearly $10.78 billion. Advance Auto takes the second place with annual revenue of almost $9.48 billion. Lastly, O’Reilly has annual revenue of $8.65 billion.
Despite the recent double-digit share price decline, long-term investors in Advance Auto have done reasonably well. An investment since the end of 2007 would have delivered annualized returns of 11.2%, which greatly outperformed the same investment in the S&P 500 that would have delivered annualized returns of 6.9% in the same period.
AutoZone shares have fared better. Since the end of 2007, an investment in AutoZone would have delivered annualized returns of 16.2%. In the same period, O’Reilly shares have returned returns of 19.2% per year.
Because of the recent management changes at Advance Auto, including Activist investor Starboard Value LP involvement beginning in September 2015 and the new CEO appointment in April 2016 — because management has yet to prove itself — Advance Auto shares are trading at a bigger discount than AutoZone and O’Reilly. On the other hand, AutoZone and O’Reilly both have a proven management team.
If you like what you've just read, consider subscribing via the "Subscribe Here" form at the top right so that you will receive an email notification when I publish a new article.Disclosure: At the time of writing, I own shares of ORLY.
Disclaimer: I am not a certified financial advisor. This article is for educational purposes, so consult a financial advisor and or tax professional if necessary before making any investment decisions.
Get Exclusive Articles from me on Seeking Alpha
- Access my portfolio of high-quality U.S. and Canadian dividend stocks.
- Real-time updates of when I buy or sell from this portfolio.
- Get best ideas of the top 3 dividend stocks from my watchlist. Updated each month.