Stock (Symbol) |
O’Reilly Automotive (ORLY) |
Stock Price |
$282 |
Sector |
| Food & Necessities |
Data is as of |
| September 26, 2016 |
Expected to Report |
| Oct 26 – 31 |
Company Description |
 O’Reilly Automotive, Inc. (O’Reilly) is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States. The Company’s stores carry a product line, including new and remanufactured automotive hard parts, maintenance items and various automotive accessories. As of December 31, 2014, the Company owned and operated 4,366 stores in 43 states, servicing both the do-it-yourself (DIY) customers and the professional service providers. O’Reilly’s stores offer new and remanufactured automotive hard parts, such as alternators, starters, fuel pumps, water pumps, brake system components, batteries, belts, hoses, temperature control, chassis parts and engine parts; maintenance items, such as oil, antifreeze, fluids, filters, wiper blades, lighting, engine additives and appearance products, and accessories, such as floor mats, seat covers and truck accessories. Source: Thomson Financial |
Sharek’s Take |
 O’Reilly Auto Parts is one of the best run companies in America. Although sales grow only around 10% a qtr, management has delivered 30 consecutive qtrs of profit growth in excess of 15% through (1) increasing store count by around 200 — or 5% — a year (2) getting same store sales growth of 5% or more the past 10 qtrs (3) increasing profit margins and (4) doing big share buybacks. ORLY’s share count fell from 140 million to 100 million from 2011-2014 as management bought back stock. The auto parts chain expects to grow its store count by 40% in the US and expand into Canada and Mexico via store openings and acquiring other auto parts companies, then going into the stores to improve sales and profit margins. ORLY had been clicking on all cylinders, but I show it missed profit estimates by 3 cents last qtr — breaking a streak of beating the street every qtr since Fall 2011 — and delivered just 10% profit growth (the company says 16%). ORLY is expected to grow profits 16% on average the next 4 qtrs and has a P/E of 26 which is slightly above my Fair Value P/E of 25. This is a solid buy-and-hold stock for both conservative and growth oriented investors. |
One Year Chart |
 Research shows that last qtr O’Reilly delivered 10% profit growth on 7% sales growth including 4% same store sales growth. Now the company claims it had 16% profit growth. Hmmm. Although both of us have $2.65 as the profit figure, management had a lower number in the year-ago-period do to a tax benefit of $0.11. Management previously lowered last qtr’s guidance due to an inventory expense with a supplier. Estimates for the next 4 qtrs just got upped a little and now stand at 16%, 17%, 12% and 19%. |
Fair Value |
 ORLY has had a P/E in the mid-20’s for a couple of years. That would normally be considered high for a 15% grower but this is a well oiled machine and deserves a premium valuation. The stock doesn’t seem to have much upside to 2017’s Fair Value, but the company is always upping annual profit estimates so these figures might be conservative. |
Bottom Line |
 O’Reilly Automotive has a great recipe for success in opening new stores, acquiring other chains, improving same store sales and buying back stock. Although profit growth had been clocking in above 20% a qtr, growth might grow to the high-teens going forward — still solid. This stock is a good one for a number of investors as it has delivered good growth with safety. ORLY ranks 24th in the Growth Portfolio Power Rankings and 9th in the Conservative Portfolio Power Rankings. |
Power Rankings |
Growth Stock Portfolio
24 of 38Aggressive Growth Portfolio N/AConservative Stock Portfolio 9 of 36 |
