Financial Review: Advance Auto Parts (NYSE:AAP) & Driven Brands (NASDAQ:DRVN)

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

Profitability

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

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

Risk & Volatility

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

Earnings and Valuation

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

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Driven Brands	$2.34 billion	1.23	-$292.50 million	($1.81)	-9.65
Advance Auto Parts	$8.91 billion	0.32	-$335.79 million	($5.87)	-8.11

Driven Brands has higher earnings, but lower revenue 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.

Analyst Ratings

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

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Driven Brands	0	3	6	1	2.80
Advance Auto Parts	2	19	1	0	1.95

Driven Brands presently has a consensus target price of $20.78, suggesting a potential upside of 18.90%. Advance Auto Parts has a consensus target price of $46.25, suggesting a potential downside of 2.83%. Given Driven Brands’ stronger consensus rating and higher probable upside, equities analysts clearly believe Driven Brands is more favorable than Advance Auto Parts.

Institutional & Insider Ownership

77.1% of Driven Brands shares are owned by institutional investors. Comparatively, 88.8% of Advance Auto Parts shares are owned by institutional investors. 2.3% of Driven Brands shares are owned by company insiders. Comparatively, 0.7% of Advance Auto Parts shares are owned by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Summary

Driven Brands beats Advance Auto Parts on 11 of the 15 factors compared between the two stocks.

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.

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.