Value
7.0/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 4.8 |
| P/S | 10.0 |
| EV/EBITDA | 6.7 |
| Fwd P/E | 8.8 |
| PEG | 8.7 |
| Analyst target | 3.0 |
- ▸Forward P/E: 12.5x
- ▸PEG: 0.72
AAP · Why this verdict
Why Advance Auto Parts (AAP) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score5.2/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Advance Auto Parts is a low-quality, no-moat auto parts retailer with a four-quarter earnings beat streak and cheap valuation, but price is above the analyst target, short interest is 29% and cash conversion is deeply negative.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Quality is below the 4.0 floor at 3.2, with no competitive moat, thin margins and a -64% FCF/NI earnings quality red flag. Quality breakdown | Quality score should rise above 4.0 as margins recover over the next 12 months. | →Stable |
| CounterThe Piotroski F-Score is a strong 7/9, suggesting underlying financial trends are improving from a depressed base. | ||
Revenue is flat to declining (-0% change) and the revenue growth component is only 2.4/10, ranking low among peers on growth. Growth breakdown | Revenue growth should turn above 3% YoY if the turnaround works. | →Stable |
| CounterEarnings growth scores 10/10, indicating margin repair can drive profit even with flat sales. | ||
The stock is attractively valued at a forward P/E of 11.8x and PEG of 0.72, and has beaten earnings estimates four quarters in a row, including $1.03 versus $0.80 expected. Catalyst breakdown | EPS surprises should stay positive over the next two reports, with the next report due in 4 days. | ↓Deteriorating |
| CounterBeats are against lowered estimates, and revenue is flat to declining, so earnings gains may come from cost cuts alone. | ||
Price of $45.11 sits above the analyst target of $43.88 (upside_pct -2.7%), leaving negative reward-to-risk of -0.18. Warnings | Analyst targets should be raised toward the current price, or price should consolidate near the target. | ↓Deteriorating |
| CounterA recovery story with improving earnings often leads analysts to raise targets after the price moves. | ||
Short interest is 29% and implied volatility is 104%, while price is below a flat 200-day average with a death cross and falling OBV. Risk breakdown | Short interest should decline below 20% if the recovery gains traction. | ↓Deteriorating |
| CounterMACD is strong and the high short interest could fuel a squeeze if the earnings report beats. | ||
Quality is below the 4.0 floor at 3.2, with no competitive moat, thin margins and a -64% FCF/NI earnings quality red flag.
→StableQuality breakdown
- Expectation
- Quality score should rise above 4.0 as margins recover over the next 12 months.
CounterThe Piotroski F-Score is a strong 7/9, suggesting underlying financial trends are improving from a depressed base.
Revenue is flat to declining (-0% change) and the revenue growth component is only 2.4/10, ranking low among peers on growth.
→StableGrowth breakdown
- Expectation
- Revenue growth should turn above 3% YoY if the turnaround works.
CounterEarnings growth scores 10/10, indicating margin repair can drive profit even with flat sales.
The stock is attractively valued at a forward P/E of 11.8x and PEG of 0.72, and has beaten earnings estimates four quarters in a row, including $1.03 versus $0.80 expected.
↓DeterioratingCatalyst breakdown
- Expectation
- EPS surprises should stay positive over the next two reports, with the next report due in 4 days.
CounterBeats are against lowered estimates, and revenue is flat to declining, so earnings gains may come from cost cuts alone.
Price of $45.11 sits above the analyst target of $43.88 (upside_pct -2.7%), leaving negative reward-to-risk of -0.18.
↓DeterioratingWarnings
- Expectation
- Analyst targets should be raised toward the current price, or price should consolidate near the target.
CounterA recovery story with improving earnings often leads analysts to raise targets after the price moves.
Short interest is 29% and implied volatility is 104%, while price is below a flat 200-day average with a death cross and falling OBV.
↓DeterioratingRisk breakdown
- Expectation
- Short interest should decline below 20% if the recovery gains traction.
CounterMACD is strong and the high short interest could fuel a squeeze if the earnings report beats.
Per-dimension breakdown
Quality
3.2/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 1.6 |
| ROA | 1.4 |
| Gross margin | 5.0 |
| Op margin | 2.2 |
| Net margin | 0.5 |
| Current ratio | 6.2 |
| FCF quality | 0.0 |
| Moat | 3.9 |
| Piotroski F | 7.8 |
- ▸Earnings quality RED FLAG: -64% FCF/NI
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 7/9
Growth
6.2/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 2.4 |
| EPS growth | 10.0 |
- ▸Declining revenue: -0%
Momentum
7.6/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 2.6 |
| MACD | 10.0 |
| OBV | 10.0 |
| MA position | 7.2 |
| Volume | 8.1 |
- ▸Overbought bear rally (RSI 76)
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA but MA still rising (+0.3%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| Analyst rating | 5.0 |
| Price target | 4.4 |
| erm sentiment | 4.6 |
Insider
6.9/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 8.6 |
| notable moves | 7.0 |
- ▸No net insider activity — $0 (0.000% of mkt cap)
- ▸Institutions accumulating
Peer rank
2.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 4.9 |
| quality rank | 3.3 |
| growth rank | 2.3 |
Technical
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 0.0 |
| support resistance | 0.1 |
| 52w position | 5.8 |
| gap | 5.0 |
Risk (lower is worse)
2.3/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 0.0 |
| days to cover | 4.0 |
| volatility | 3.1 |
| put call | 0.0 |
| implied vol | 0.0 |
| beta | 6.8 |
| debt equity | 2.5 |
- ▸High short interest: 29%
- ▸Elevated put/call: 5.03
- ▸High IV: 108%
Catalyst
6.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 10.0 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| dividend safety | 3.7 |
- ▸Strong earnings: 3B/0M
- ▸Earnings today
- ▸Yield trap warning: high yield but unsafe
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (6)
- MOMENTUM:7.6>=5.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-0.9=NEGATIVE
- EARNINGS_PROXIMITY:0d<=7d
Warning (0)
none
Reward-to-Risk
-0.90
Upside
-13.5%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilityAggressive — MCap $2.9B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the ASYMMETRY gate's -0.9=NEGATIVE outcome against Momentum at 7.6 and asymmetric R:R of -0.90.
The strongest dimensions are Momentum at 7.6, Value at 7.0, and Insider at 6.9; the weakest are Risk (lower is worse) at 2.3, Technical at 2.7, and Peer rank at 2.9. The V9 engine flagged 2 failed gates, producing an asymmetric reward-to-risk of -0.90 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Weak Quality No Moat
Trip ifQuality score rises above 4.0 from current 3.2.
- P2Cheap Valuation Earnings Beats
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P3Price Above Analyst Target
Trip ifPrice falls more than 10% below the $43.88 analyst target.
- P4Heavy Short Interest Weak Trend
Trip ifShort interest falls below 15% from current 29%.
- P5Stagnant Revenue Growth
Trip ifRevenue growth exceeds 5% YoY for 2 consecutive quarters.