Advance Auto Parts (NYSE:AAP – Get Free Report) and Group 1 Automotive (NYSE:GPI – Get Free Report) are both mid-cap consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their profitability, earnings, valuation, risk, dividends, analyst recommendations and institutional ownership.
Profitability
This table compares Advance Auto Parts and Group 1 Automotive’s net margins, return on equity and return on assets.
| Net Margins | Return on Equity | Return on Assets | |
| Advance Auto Parts | 1.16% | 9.41% | 1.77% |
| Group 1 Automotive | 1.75% | 14.91% | 4.19% |
Earnings and Valuation
This table compares Advance Auto Parts and Group 1 Automotive”s top-line 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 | 0.33 | $44.00 million | $1.64 | 28.33 |
| Group 1 Automotive | $22.57 billion | 0.14 | $325.20 million | $31.60 | 8.32 |
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.
Insider & Institutional Ownership
88.7% of Advance Auto Parts shares are held by institutional investors. Comparatively, 99.9% of Group 1 Automotive shares are held by institutional investors. 0.8% of Advance Auto Parts shares are held by company insiders. Comparatively, 2.4% of Group 1 Automotive 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.
Risk & Volatility
Advance Auto Parts has a beta of 1.02, suggesting that its share price is 2% more volatile than the S&P 500. Comparatively, Group 1 Automotive has a beta of 0.96, suggesting that its share price is 4% less volatile than the S&P 500.
Dividends
Advance Auto Parts pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Group 1 Automotive pays an annual dividend of $2.20 per share and has a dividend yield of 0.8%. Advance Auto Parts pays out 61.0% of its earnings in the form of a dividend. Group 1 Automotive pays out 7.0% 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. Advance Auto Parts has raised its dividend for 1 consecutive years and Group 1 Automotive has raised its dividend for 2 consecutive years.
Analyst Recommendations
This is a summary of recent recommendations for Advance Auto Parts and Group 1 Automotive, as provided by MarketBeat.com.
| Sell Ratings | Hold Ratings | Buy Ratings | Strong Buy Ratings | Rating Score | |
| Advance Auto Parts | 4 | 14 | 3 | 0 | 1.95 |
| Group 1 Automotive | 3 | 2 | 5 | 0 | 2.20 |
Advance Auto Parts presently has a consensus target price of $47.50, suggesting a potential upside of 2.24%. Group 1 Automotive has a consensus target price of $330.10, suggesting a potential upside of 25.61%. Given Group 1 Automotive’s stronger consensus rating and higher probable upside, analysts plainly believe Group 1 Automotive is more favorable than Advance Auto Parts.
Summary
Group 1 Automotive beats Advance Auto Parts on 13 of the 17 factors compared between the two stocks.
About Advance Auto Parts
Advance Auto Parts, Inc. is a retailer of automotive aftermarket parts, accessories and maintenance products. Its offerings include replacement parts, batteries, tools, fluids and other supplies for a range of vehicles. The company serves both do-it-yourself customers and professional automotive repair shops through its stores, online channels and network of independent locations. Its retail banners include Advance Auto Parts and Carquest. Advance Auto Parts traces its roots to 1932, when the business began in Roanoke, Virginia.
About Group 1 Automotive
Group 1 Automotive, Inc. is an international automotive retailer headquartered in Houston, Texas. Founded in 1997, the company operates franchised dealerships and collision centers in the United States and the United Kingdom. Its dealerships sell new and used vehicles from a range of manufacturers and provide related services, including vehicle maintenance and repair, parts sales, collision repair, and automotive financing and insurance products. Group 1’s business also includes manufacturer-authorized service operations and parts departments that support customers throughout vehicle ownership.
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