Reviewing Rent the Runway (NASDAQ:RENT) and Advance Auto Parts (NYSE:AAP)

Advance Auto Parts (NYSE:AAP) and Rent the Runway (NASDAQ:RENT) are both consumer discretionary companies, but which is the better investment? We will contrast the two companies based on the strength of their valuation, analyst recommendations, profitability, dividends, earnings, risk and institutional ownership.

Institutional and Insider Ownership

88.7% of Advance Auto Parts shares are owned by institutional investors. Comparatively, 73.1% of Rent the Runway shares are owned by institutional investors. 0.8% of Advance Auto Parts shares are owned by company insiders. Comparatively, 0.4% of Rent the Runway shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Profitability

This table compares Advance Auto Parts and Rent the Runway’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advance Auto Parts	0.97%	9.84%	1.83%
Rent the Runway	11.80%	N/A	-21.89%

Analyst Recommendations

This is a breakdown of current ratings for Advance Auto Parts and Rent the Runway, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advance Auto Parts	4	16	2	0	1.91
Rent the Runway	1	0	0	0	1.00

Advance Auto Parts presently has a consensus price target of $47.61, indicating a potential upside of 3.96%. Given Advance Auto Parts’ stronger consensus rating and higher probable upside, equities research analysts plainly believe Advance Auto Parts is more favorable than Rent the Runway.

Risk & Volatility

Advance Auto Parts has a beta of 1.07, meaning that its stock price is 7% more volatile than the S&P 500. Comparatively, Rent the Runway has a beta of 1.24, meaning that its stock price is 24% more volatile than the S&P 500.

Valuation and Earnings

This table compares Advance Auto Parts and Rent the Runway”s gross revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advance Auto Parts	$8.60 billion	0.32	$44.00 million	$1.37	33.43
Rent the Runway	$329.80 million	0.27	$22.60 million	$12.66	0.21

Advance Auto Parts has higher revenue and earnings than Rent the Runway. Rent the Runway 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

Advance Auto Parts beats Rent the Runway on 11 of the 14 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 Rent the Runway

Rent the Runway, Inc. operates shared designer closet in the United States. The company offers evening wear and accessories, ready-to-wear, workwear, denim, casual, maternity, outerwear, blouses, knitwear, loungewear, jewelry, handbags, activewear, and ski wear under subscription, rental, and resale offering. It also engages in the software development and support activities. Rent the Runway, Inc. was incorporated in 2009 and is headquartered in Brooklyn, New York.