Critical Survey: Advance Auto Parts (NYSE:AAP) versus Driven Brands (NASDAQ:DRVN)

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

Risk and Volatility

Advance Auto Parts has a beta of 1.06, meaning that its stock price is 6% more volatile than the S&P 500. Comparatively, Driven Brands has a beta of 1.11, meaning that its stock price is 11% more volatile than the S&P 500.

Institutional and Insider Ownership

88.8% of Advance Auto Parts shares are held by institutional investors. Comparatively, 77.1% of Driven Brands shares are held by institutional investors. 0.4% of Advance Auto Parts shares are held by company insiders. Comparatively, 3.5% of Driven Brands shares are held by company insiders. Strong institutional ownership is an indication that hedge funds, endowments and large money managers believe a stock will outperform the market over the long term.

Profitability

This table compares Advance Auto Parts and Driven Brands’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advance Auto Parts	-3.74%	-1.76%	-0.37%
Driven Brands	-12.75%	19.61%	2.79%

Analyst Recommendations

This is a breakdown of recent ratings and price targets for Advance Auto Parts and Driven Brands, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advance Auto Parts	1	20	1	0	2.00
Driven Brands	0	3	6	1	2.80

Advance Auto Parts presently has a consensus price target of $46.25, indicating a potential downside of 4.74%. Driven Brands has a consensus price target of $20.78, indicating a potential upside of 21.79%. Given Driven Brands’ stronger consensus rating and higher possible upside, analysts clearly believe Driven Brands is more favorable than Advance Auto Parts.

Valuation and Earnings

This table compares Advance Auto Parts and Driven Brands”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advance Auto Parts	$9.09 billion	0.32	-$335.79 million	($5.87)	-8.27
Driven Brands	$2.34 billion	1.20	-$292.50 million	($1.81)	-9.43

Driven Brands has lower revenue, but higher earnings than Advance Auto Parts. Driven Brands 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.

Summary

Driven Brands beats Advance Auto Parts on 11 of the 15 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 Driven Brands

Driven Brands Holdings Inc., together with its subsidiaries, provides automotive services to retail and commercial customers in the United States, Canada, and internationally. It offers various services, such as paint, collision, glass, repair, car wash, oil change, and maintenance services. The company also distributes automotive parts, including radiators, air conditioning components, and exhaust products to automotive repair shops, auto parts stores, body shops, and other auto repair outlets; windshields and glass accessories through a network of distribution centers; and consumable products, such as oil filters and wiper blades, as well as training services to repair and maintenance, and paint and collision shops. It sells its products and services under the CARSTAR, IMO, MAACO, Meineke Car Care Centers, PH Vitres D’Autos, Take 5 Oil Change, Take 5 Car Wash, Auto Glass Now, Fix Auto USA, and 1-800-Radiator & A/C, Spire Supply, and Automotive Training Institute brands. The company was founded in 1972 and is headquartered in Charlotte, North Carolina.