Comparing Advance Auto Parts (NYSE:AAP) & Hennes & Mauritz (OTCMKTS:HNNMY)

Hennes & Mauritz (OTCMKTS:HNNMY) and Advance Auto Parts (NYSE:AAP) are both consumer discretionary companies, but which is the superior business? We will compare the two companies based on the strength of their earnings, analyst recommendations, institutional ownership, dividends, profitability, valuation and risk.

Volatility and Risk

Hennes & Mauritz has a beta of 1.2, indicating that its stock price is 20% more volatile than the S&P 500. Comparatively, Advance Auto Parts has a beta of 1.02, indicating that its stock price is 2% more volatile than the S&P 500.

Insider & Institutional Ownership

0.0% of Hennes & Mauritz shares are held by institutional investors. Comparatively, 88.7% of Advance Auto Parts shares are held by institutional investors. 0.8% of Advance Auto Parts shares are held by insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of recent recommendations and price targets for Hennes & Mauritz and Advance Auto Parts, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Hennes & Mauritz	3	4	0	0	1.57
Advance Auto Parts	4	14	3	0	1.95

Advance Auto Parts has a consensus price target of $47.50, suggesting a potential upside of 3.61%. Given Advance Auto Parts’ stronger consensus rating and higher possible upside, analysts clearly believe Advance Auto Parts is more favorable than Hennes & Mauritz.

Profitability

This table compares Hennes & Mauritz and Advance Auto Parts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Hennes & Mauritz	5.94%	33.70%	7.80%
Advance Auto Parts	1.16%	9.41%	1.77%

Earnings & Valuation

This table compares Hennes & Mauritz 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
Hennes & Mauritz	$23.01 billion	1.07	$1.23 billion	$0.17	20.65
Advance Auto Parts	$8.60 billion	0.32	$44.00 million	$1.64	27.95

Hennes & Mauritz has higher revenue and earnings than Advance Auto Parts. Hennes & Mauritz 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.

Dividends

Hennes & Mauritz pays an annual dividend of $0.07 per share and has a dividend yield of 2.0%. Advance Auto Parts pays an annual dividend of $1.00 per share and has a dividend yield of 2.2%. Hennes & Mauritz pays out 41.2% of its earnings in the form of a dividend. Advance Auto Parts pays out 61.0% of its earnings in the form of a dividend. Both companies have healthy payout ratios and should be able to cover their dividend payments with earnings for the next several years. Advance Auto Parts has raised its dividend for 1 consecutive years. Advance Auto Parts is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Summary

Advance Auto Parts beats Hennes & Mauritz on 9 of the 17 factors compared between the two stocks.

About Hennes & Mauritz

Hennes & Mauritz AB, commonly known as H&M Group, is a Swedish fashion and retail company. Erling Persson founded the business in 1947 in Västerås, Sweden, initially selling women’s clothing under the name Hennes. In 1968, the company acquired the hunting and fishing retailer Mauritz Widforss, adding menswear and adopting the Hennes & Mauritz name. The company sells clothing, footwear, accessories, beauty products and home furnishings through its retail stores and online platforms. Its brand portfolio includes H&M, COS, Weekday, & Other Stories and ARKET, serving customers across markets in Europe, North America, Asia and other regions.

About Advance Auto Parts

Advance Auto Parts, Inc. is a retailer of automotive aftermarket parts, accessories and maintenance products. Its offerings include replacement parts, batteries, tools, fluids and other supplies for a range of vehicles. The company serves both do-it-yourself customers and professional automotive repair shops through its stores, online channels and network of independent locations. Its retail banners include Advance Auto Parts and Carquest. Advance Auto Parts traces its roots to 1932, when the business began in Roanoke, Virginia.