Group 1 Automotive (NYSE:GPI) vs. Advance Auto Parts (NYSE:AAP) Head-To-Head Comparison

Group 1 Automotive (NYSE:GPI) and Advance Auto Parts (NYSE:AAP) are both mid-cap consumer discretionary companies, but which is the superior investment? We will contrast the two businesses based on the strength of their institutional ownership, analyst recommendations, earnings, valuation, risk, profitability and dividends.

Insider and Institutional Ownership

99.9% of Group 1 Automotive shares are held by institutional investors. Comparatively, 88.7% of Advance Auto Parts shares are held by institutional investors. 2.4% of Group 1 Automotive shares are held by company insiders. Comparatively, 0.8% of Advance Auto Parts shares are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

Dividends

Group 1 Automotive pays an annual dividend of $2.20 per share and has a dividend yield of 0.8%. Advance Auto Parts pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Group 1 Automotive pays out 7.0% of its earnings in the form of a dividend. Advance Auto Parts pays out 61.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Group 1 Automotive has raised its dividend for 2 consecutive years and Advance Auto Parts has raised its dividend for 1 consecutive years.

Profitability

This table compares Group 1 Automotive and Advance Auto Parts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Group 1 Automotive	1.75%	14.91%	4.19%
Advance Auto Parts	0.97%	9.84%	1.83%

Volatility and Risk

Group 1 Automotive has a beta of 0.96, meaning that its share price is 4% less volatile than the S&P 500. Comparatively, Advance Auto Parts has a beta of 1.02, meaning that its share price is 2% more volatile than the S&P 500.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Group 1 Automotive and Advance Auto Parts, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Group 1 Automotive	3	2	5	0	2.20
Advance Auto Parts	3	15	3	0	2.00

Group 1 Automotive presently has a consensus price target of $330.10, indicating a potential upside of 22.85%. Advance Auto Parts has a consensus price target of $47.50, indicating a potential upside of 3.23%. Given Group 1 Automotive’s stronger consensus rating and higher probable upside, equities analysts plainly believe Group 1 Automotive is more favorable than Advance Auto Parts.

Valuation and Earnings

This table compares Group 1 Automotive and Advance Auto Parts”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Group 1 Automotive	$22.57 billion	0.14	$325.20 million	$31.60	8.50
Advance Auto Parts	$8.60 billion	0.32	$44.00 million	$1.64	28.06

Group 1 Automotive has higher revenue and earnings than Advance Auto Parts. Group 1 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.

Summary

Group 1 Automotive beats Advance Auto Parts on 13 of the 17 factors compared between the two stocks.

About Group 1 Automotive

Group 1 Automotive, Inc., through its subsidiaries, operates in the automotive retail industry in the United States and the United Kingdom. The company sells new and used cars, light trucks, and vehicle parts, as well as service and insurance contracts; arranges related vehicle financing; and offers automotive maintenance and repair services. Group 1 Automotive, Inc. was incorporated in 1995 and is headquartered in Houston, Texas.

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.