US. Auto Parts Network Inc. (NASDAQ:PRTS), a US$53.86M small-cap, operates in the retail industry impacted by the digital transformation for all retail channels. Digital’s growing impact has reduced the barriers to entry for new brands and created competition where scale and retailer relationships have historically provided a moat. Retail analysts are forecasting for the entire industry, an extremely elevated growth of 36.33% in the upcoming year , and an enormous triple-digit earnings growth over the next couple of years. Not surprisingly, this rate is more than double the growth rate of the US stock market as a whole. I’ll take you through the retail sector growth expectations, and also determine whether U.S. Auto Parts Network is a laggard or leader relative to its retail peers. Check out our latest analysis for U.S. Auto Parts Network
What’s the catalyst for U.S. Auto Parts Network’s sector growth?
Online retailer profits closely track the overall performance of the economy. Looking at trends for growth in macroeconomic factors such as inflation, consumer confidence and interest rates are important when thinking about investing in the retail industry. In the past year, the industry delivered growth in the twenties, beating the US market growth of 13.44%. U.S. Auto Parts Network leads the pack with its impressive earnings growth of over 100% last year. This proven growth may make U.S. Auto Parts Network a more expensive stock relative to its peers.
Is U.S. Auto Parts Network and the sector relatively cheap?
The online retail sector’s PE is currently hovering around 40.47x, higher than the rest of the US stock market PE of 18.28x. This illustrates a somewhat overpriced sector compared to the rest of the market. However, the industry did return a higher 15.84% compared to the market’s 11.14%, which may be indicative of past tailwinds. On the stock-level, U.S. Auto Parts Network is trading at a lower PE ratio of 2.49x, making it cheaper than the average online retail stock. In terms of returns, U.S. Auto Parts Network generated 58.27% in the past year, which is 42.43% over the online retail sector.
U.S. Auto Parts Network recently delivered an industry-beating growth rate in earnings, which is a positive for shareholders. In addition to this, its PE is below its online retail peers, suggesting it is also trading at a relatively cheaper price. If U.S. Auto Parts Network has been on your watchlist for a while, now may be the best time to enter into the stock. Its industry-beating growth delivered may not have been fully accounted for in its shares given its lower PE ratio relative to its peers. However, before you make a decision on the stock, I suggest you look at U.S. Auto Parts Network’s fundamentals in order to build a holistic investment thesis.
- Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
- Historical Track Record: What has PRTS’s performance been like over the past? Go into more detail in the past track record analysis and take a look at the free visual representations of our analysis for more clarity.
- Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of U.S. Auto Parts Network? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!
To help readers see pass the short term volatility of the financial market, we aim to bring you a long-term focused research analysis purely driven by fundamental data. Note that our analysis does not factor in the latest price sensitive company announcements.
The author is an independent contributor and at the time of publication had no position in the stocks mentioned.