Is Advance Auto Parts, Inc. overvalued or undervalued?

As of 26 February 2025, the valuation grade for Advance Auto Parts, Inc. has moved from expensive to risky, indicating a deterioration in its financial standing. The company appears to be overvalued based on its current metrics, particularly given its negative P/E ratio and ROCE of -20.49%. Key ratios include a Price to Book Value of 1.43, an EV to EBIT of -6.88, and an EV to Sales of 0.35, all of which suggest significant challenges in profitability and valuation.
In comparison to peers, Advance Auto Parts, Inc. has a notably worse EV to EBITDA ratio of -28.32 when compared to AutoNation, Inc. at 15.94, and Dick's Sporting Goods, Inc. at 18.35, both of which are classified as attractive. The company's recent performance shows a 1-year return of 42.90%, significantly outperforming the S&P 500's 17.14%, but this is overshadowed by a 3-year return of -63.96% compared to the S&P 500's 70.41%, reinforcing the notion of overvaluation amidst declining long-term performance.