Head to Head Review: GameStop (NYSE:GME) & Advance Auto Parts (NYSE:AAP)

Advance Auto Parts (NYSE:AAP) and GameStop (NYSE:GME) are both consumer discretionary companies, but which is the better stock? We will compare the two companies based on the strength of their risk, profitability, earnings, institutional ownership, analyst recommendations, valuation and dividends.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Advance Auto Parts and GameStop, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Advance Auto Parts	1	18	2	0	2.05
GameStop	0	1	0	0	2.00

Advance Auto Parts currently has a consensus target price of $50.19, indicating a potential upside of 11.58%. Given Advance Auto Parts’ stronger consensus rating and higher possible upside, analysts plainly believe Advance Auto Parts is more favorable than GameStop.

Risk & Volatility

Advance Auto Parts has a beta of 1.01, indicating that its share price is 1% more volatile than the S&P 500. Comparatively, GameStop has a beta of 1.72, indicating that its share price is 72% more volatile than the S&P 500.

Profitability

This table compares Advance Auto Parts and GameStop’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Advance Auto Parts	0.97%	9.84%	1.83%
GameStop	25.16%	13.57%	7.16%

Institutional & Insider Ownership

88.7% of Advance Auto Parts shares are held by institutional investors. Comparatively, 29.2% of GameStop shares are held by institutional investors. 0.8% of Advance Auto Parts shares are held by company insiders. Comparatively, 9.5% of GameStop shares are held by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a company is poised for long-term growth.

Earnings & Valuation

This table compares Advance Auto Parts and GameStop”s revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Advance Auto Parts	$8.60 billion	0.32	$44.00 million	$1.37	32.83
GameStop	$3.63 billion	3.01	$418.40 million	$1.52	14.25

GameStop has lower revenue, but higher earnings than Advance Auto Parts. GameStop 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.

Summary

GameStop beats Advance Auto Parts on 8 of the 14 factors compared between the two stocks.

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.

About GameStop

GameStop Corp., a specialty retailer, provides games and entertainment products through its stores and ecommerce platforms in the United States, Canada, Australia, and Europe. The company sells new and pre-owned gaming platforms; accessories, such as controllers, gaming headsets, and virtual reality products; new and pre-owned gaming software; and in-game digital currency, digital downloadable content, and full-game downloads. It sells collectibles comprising apparel, toys, trading cards, gadgets, and other retail products for pop culture and technology enthusiasts, as well as engages in the digital asset wallet and NFT marketplace activities. The company operates stores and ecommerce sites under the GameStop, EB Games, and Micromania brands; and pop culture themed stores that sell collectibles, apparel, gadgets, electronics, toys, and other retail products under the Zing Pop Culture brand, as well as offers Game Informer magazine, a print and digital gaming publication. The company was formerly known as GSC Holdings Corp. GameStop Corp. was founded in 1996 and is headquartered in Grapevine, Texas.