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Halfords (LSE:HFD) shares have come under pressure in recent months. At current levels, is the Halfords share price a bargain or one for me to avoid?

Automotive and cycling retail giant

Halfords is an automotive and cycling goods retail business. It has over 100,000 employees at more than 750 locations throughout the UK, along with an online store. It claims that 90% of people in the UK are never more than 20 minutes away from one of its locations.

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So what’s happening with the Halfords share price currently? Well, as I write, the shares are trading for 154p. At this time last year, the shares were trading for 402p, which is a 61% decline over a 12-month period.

I believe Halfords shares have declined due to the stock market correction. The correction has been caused by the tragic events in Ukraine but also by macroeconomic factors at play — but more on that later.

To buy or not to buy?

So what are the pros and cons of my buying this stock?

FOR: Halfords’ presence and profile is a big positive point for me personally. Its extensive footprint throughout the UK and online offering tell me it should still be able to perform well despite macroeconomic issues. In addition to this, Halfords has performed well in recent years. I do understand past performance is not a guarantee of the future, however. It has grown revenue and profit in the past three years in a row. Preliminary full-year results released last week for 2022 were positive too. Revenue and profit growth were among the headlines I noticed from the results.

AGAINST: Macroeconomic issues have placed pressure on performance and the Halfords share price. Rising inflation and raw materials costs, coupled with the supply chain crisis, have hampered many businesses and Halfords is no different. Rising costs mean passing this on to customers. Supply chain issues have resulted in fewer products to sell on the shelves.

FOR: I like the fact Halfords regularly completes acquisitions to boost its offering and grow its profile and performance. In the past fiscal year, 2022, it procured three new businesses. One of these was to boost its automotive centre presence to offer motorists more convenient and accessible locations to service their vehicles. It purchased Axle Group Holdings which has the National Tyres and Autocare brands under its umbrella.

AGAINST: The current cost of living crisis is a worry for me. Although automotive products and services are often essential to maintain vehicles, cycling goods could be considered a luxury item. This could result in Halfords seeing a material impact on sales and performance in this aspect of its business. Furthermore, the price rises mentioned earlier could mean consumers looking to make their cash go futher may seek alternative, online-only brands that may beat Halfords on price.

The Halfords share price looks too good to miss

I believe Halfords shares look attractive and I would happily add the shares to my holdings and hold them for the long term. I view the risks noted above as shorter-term issues.

The shares look good value for money on a price-to-earnings ratio of just four. The shares also pay a dividend which would boost my passive income stream and currently yield close to 5%. Dividends can be cancelled, however.

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