Critical Comparison: Advance Auto Parts (NYSE:AAP) and Victoria’s Secret & Co. (NYSE:VSXY)

Victoria’s Secret & Co. (NYSE:VSXY) and Advance Auto Parts (NYSE:AAP) are both mid-cap consumer discretionary companies, but which is the better business? We will compare the two businesses based on the strength of their dividends, earnings, valuation, analyst recommendations, profitability, institutional ownership and risk.

Risk & Volatility

Victoria’s Secret & Co. has a beta of 2.06, meaning that its stock price is 106% more volatile than the S&P 500. Comparatively, Advance Auto Parts has a beta of 1.03, meaning that its stock price is 3% more volatile than the S&P 500.

Profitability

This table compares Victoria’s Secret & Co. and Advance Auto Parts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Victoria’s Secret & Co.	3.11%	38.03%	6.10%
Advance Auto Parts	0.51%	8.95%	1.70%

Valuation and Earnings

This table compares Victoria’s Secret & Co. 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
Victoria’s Secret & Co.	$6.55 billion	1.08	$161.00 million	$1.86	47.82
Advance Auto Parts	$8.60 billion	0.40	$44.00 million	$0.72	78.53

Victoria’s Secret & Co. has higher earnings, but lower revenue than Advance Auto Parts. Victoria’s Secret & Co. 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

90.3% of Victoria’s Secret & Co. shares are owned by institutional investors. Comparatively, 88.7% of Advance Auto Parts shares are owned by institutional investors. 0.5% of Victoria’s Secret & Co. shares are owned by insiders. Comparatively, 0.8% of Advance Auto Parts shares are owned by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company is poised for long-term growth.

Analyst Ratings

This is a breakdown of current ratings and price targets for Victoria’s Secret & Co. and Advance Auto Parts, as provided by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Victoria’s Secret & Co.	0	6	6	1	2.62
Advance Auto Parts	1	17	2	0	2.05

Victoria’s Secret & Co. currently has a consensus target price of $88.70, indicating a potential downside of 0.27%. Advance Auto Parts has a consensus target price of $58.91, indicating a potential upside of 4.18%. Given Advance Auto Parts’ higher probable upside, analysts clearly believe Advance Auto Parts is more favorable than Victoria’s Secret & Co..

Summary

Victoria’s Secret & Co. beats Advance Auto Parts on 11 of the 15 factors compared between the two stocks.

About Victoria’s Secret & Co.

Victoria’s Secret & Co. operates as a lingerie, clothing and beauty retailer. It offers bras, panties, lingerie, pajamas, sleep, sport and swim apparel, and beauty products. The company was founded in 1963 and is headquartered in Reynoldsburg, OH.

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.