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Advance Auto Parts ROA %

: 4.94% (As of Sep. 2020)
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ROA % is calculated as Net Income divided by its average Total Assets over a certain period of time. Advance Auto Parts's annualized Net Income for the quarter that ended in Sep. 2020 was $590 Mil. Advance Auto Parts's average Total Assets over the quarter that ended in Sep. 2020 was $11,952 Mil. Therefore, Advance Auto Parts's annualized ROA % for the quarter that ended in Sep. 2020 was 4.94%.

NYSE:AAP' s ROA % Range Over the Past 10 Years
Min: 4.09   Med: 6.59   Max: 11.26
Current: 4.09

4.09
11.26

During the past 13 years, Advance Auto Parts's highest ROA % was 11.26%. The lowest was 4.09%. And the median was 6.59%.

NYSE:AAP's ROA % is ranked higher than
73% of the 1038 Companies
in the Retail - Cyclical industry.

( Industry Median: 0.99 vs. NYSE:AAP: 4.09 )

Advance Auto Parts ROA % Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Advance Auto Parts Annual Data
Dec10 Dec11 Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19
ROA % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 5.88 5.59 5.66 4.84 4.80

Advance Auto Parts Quarterly Data
Dec14 Apr15 Sep15 Dec15 Apr16 Sep16 Dec16 Apr17 Sep17 Dec17 Apr18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20
ROA % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 4.42 3.43 1.50 6.33 4.94

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Advance Auto Parts ROA % Distribution

* The bar in red indicates where Advance Auto Parts's ROA % falls into.



Advance Auto Parts ROA % Calculation

Advance Auto Parts's annualized ROA % for the fiscal year that ended in Dec. 2019 is calculated as:

ROA %=Net Income (A: Dec. 2019 )/( (Total Assets (A: Dec. 2018 )+Total Assets (A: Dec. 2019 ))/ count )
=486.896/( (9040.648+11248.525)/ 2 )
=486.896/10144.5865
=4.80 %

Advance Auto Parts's annualized ROA % for the quarter that ended in Sep. 2020 is calculated as:

ROA %=Net Income (Q: Sep. 2020 )/( (Total Assets (Q: Jun. 2020 )+Total Assets (Q: Sep. 2020 ))/ count )
=589.904/( (11930.665+11972.763)/ 2 )
=589.904/11951.714
=4.94 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

In the calculation of annual ROA %, the net income of the last fiscal year and the average total assets over the fiscal year are used. In calculating the quarterly data, the Net Income data used here is four times the quarterly (Sep. 2020) net income data. ROA % is displayed in the 30-year financial page.


Advance Auto Parts  (NYSE:AAP) ROA % Explanation

ROA % measures the rate of return on the total assets (shareholder equity plus liabilities). It measures a firm's efficiency at generating profits from shareholders' equity plus its liabilities. ROA % shows how well a company uses what it has to generate earnings. ROA %s can vary drastically across industries. Therefore, ROA % should not be used to compare companies in different industries. For retailers, a ROA % of higher than 5% is expected. For example, Wal-Mart (WMT) has a ROA % of about 8% as of 2012. For banks, ROA % is close to their interest spread. A bank’s ROA % is typically well under 2%.

Similar to ROE, ROA % is affected by profit margins and asset turnover. This can be seen from the Du Pont Formula:

ROA %(Q: Sep. 2020 )
=Net Income/Total Assets
=589.904/11951.714
=(Net Income / Revenue)*(Revenue / Total Assets)
=(589.904 / 10167.712)*(10167.712 / 11951.714)
=Net Margin %*Asset Turnover
=5.8 %*0.8507
=4.94 %

Note: The Net Income data used here is four times the quarterly (Sep. 2020) net income data. The Revenue data used here is four times the quarterly (Sep. 2020) revenue data.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Be Aware

Like ROE, ROA % is calculated with only 12 months data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective. ROA % can be affected by events such as stock buyback or issuance, and by goodwill, a company's tax rate and its interest payment. ROA % may not reflect the true earning power of the assets. A more accurate measurement is ROC % (ROC).

Many analysts argue the higher return the better. Buffett states that really high ROA % may indicate vulnerability in the durability of the competitive advantage.

E.g. Raising $43b to take on KO is impossible, but $1.7b to take on Moody's is. Although Moody's ROA % and underlying economics is far superior to Coca Cola, the durability is far weaker because of lower entry cost.


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