I would like to add some nuance to something in the write-up: You say that GM are unlikely to go over 30% in the future bc the lower current GM of export sales. Let me argue that GM could improve over 30% in the long term:
The reason why GMs are currently lower in the export segment is because APR relies on third party distributors for those sales. As APR expands outside of Poland and supply those customers without using 3rd party resellers, the gross margins might improve, as the outside-of-Poland operations would resemble more the currently Polish operations
Thanks for the feedback—great point. While I agree it's achievable, my initial point was based on the current business model and steady-state. Achieving this would require some changes for APR. Ultimately, management has stated that the bottom-line impact is neutral, so it's not a major issue, but definitely something to keep an eye on.
A great analysis! I never understood why this company trades at a low valuation despite an amazing growth record which likely to continue for many years ahead
Are they closing DCs on the west coast?
Not that I’m aware of. What makes you think that?
Trying to get a better idea of who benefits the most out of this sir: https://www.marketwatch.com/story/advanced-auto-parts-stock-falls-after-a-surprise-quarterly-loss-plan-to-close-more-than-700-stores-aec84174
I think you’ve mixed up the two stocks here. Auto Partner operates in Europe. Advanced Auto Parts in your article is in the US.
My apologies sir, it was this one, not one of yours:https://eaglepointcapital.substack.com/p/advance-auto-parts-will-this-turnaround/comments?utm_source=substack%2Csubstack&publication_id=374159&post_id=146516674&utm_medium=email%2Cemail&isFreemail=true&r=2r7p4d&utm_campaign=email-half-magic-comments&triedRedirect=true
I asked it in the wrong thread, I remember you had one for AAP too...
Well done!
Thank you 👍
Great article as always.
I would like to add some nuance to something in the write-up: You say that GM are unlikely to go over 30% in the future bc the lower current GM of export sales. Let me argue that GM could improve over 30% in the long term:
The reason why GMs are currently lower in the export segment is because APR relies on third party distributors for those sales. As APR expands outside of Poland and supply those customers without using 3rd party resellers, the gross margins might improve, as the outside-of-Poland operations would resemble more the currently Polish operations
Hi Alonso,
Thanks for the feedback—great point. While I agree it's achievable, my initial point was based on the current business model and steady-state. Achieving this would require some changes for APR. Ultimately, management has stated that the bottom-line impact is neutral, so it's not a major issue, but definitely something to keep an eye on.
A great analysis! I never understood why this company trades at a low valuation despite an amazing growth record which likely to continue for many years ahead
Thank you! I think part of the reason is its size and also the fact that it’s listed outside of the US.
thanks!
Welcome 👍