Advance Auto Parts Inc (AAP)
Profitability ratios
Return on sales
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Gross profit margin | 40.09% | 44.26% | 44.82% | 44.59% | 43.83% |
| Operating profit margin | 1.01% | 6.02% | 7.63% | 7.46% | 6.98% |
| Pretax margin | 0.28% | 5.82% | 7.33% | 6.48% | 6.57% |
| Net profit margin | 0.26% | 4.17% | 5.60% | 4.90% | 5.02% |
Advance Auto Parts Inc's profitability ratios have shown some fluctuations over the past five years.
The gross profit margin has gradually decreased from 43.83% in 2019 to 40.09% in 2023. This indicates that the company's ability to generate profit from its sales has declined over the period.
The operating profit margin has also experienced a downward trend, dropping from 6.98% in 2019 to 1.01% in 2023. This suggests that the company's operational efficiency in managing its expenses and generating profits has weakened.
Similarly, the pretax margin has shown a decrease from 6.57% in 2019 to 0.28% in 2023, implying that the company's pre-tax profitability has declined over the years.
The net profit margin has followed a similar pattern, decreasing from 5.02% in 2019 to 0.26% in 2023, indicating that the company's bottom-line profitability has been negatively impacted.
Overall, the declining trend in Advance Auto Parts Inc's profitability ratios raises concerns about its financial performance and may warrant further investigation into the factors contributing to this downward trajectory.
Return on investment
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | |
|---|---|---|---|---|---|
| Operating return on assets (Operating ROA) | 0.93% | 5.59% | 6.88% | 6.33% | 6.02% |
| Return on assets (ROA) | 0.24% | 3.87% | 5.05% | 4.16% | 4.33% |
| Return on total capital | 2.66% | 18.86% | 20.14% | 16.33% | 15.76% |
| Return on equity (ROE) | 1.18% | 17.87% | 19.69% | 13.85% | 13.72% |
The profitability ratios of Advance Auto Parts Inc show a mixed performance over the past five years. The Operating return on assets (Operating ROA) has fluctuated significantly, ranging from 0.93% in 2023 to a high of 6.88% in 2021. This ratio indicates the company's ability to generate operating income per dollar of assets. The downward trend in Operating ROA suggests challenges in generating operating profits relative to the size of assets in recent years.
The Return on assets (ROA) ratio has also declined over the same period, from 5.05% in 2021 to 0.24% in 2023. ROA measures the company's overall ability to generate profit from its assets. The decreasing trend in ROA indicates a decline in overall profitability relative to the total assets employed by the company.
Return on total capital has also shown fluctuations, with a high of 20.14% in 2021 and a low of 2.66% in 2023. This ratio reflects the return the company earns on all capital, including debt and equity. The variation in this ratio suggests changes in the efficiency of utilizing total capital to generate returns for investors.
The Return on equity (ROE) ratio has shown a similar pattern, with fluctuations over the years. ROE has decreased from 19.69% in 2021 to 1.18% in 2023. ROE measures the return generated on shareholders' equity. The declining trend in ROE indicates a decreasing ability to generate profits for the equity holders of the company.
In summary, the profitability ratios of Advance Auto Parts Inc have shown a mixed performance, with fluctuations and declines in key metrics over the past five years. This indicates potential challenges in generating profits and returns for investors, highlighting the need for the company to enhance its operational efficiency and profitability in the coming periods.