O'Reilly Automotive Inc (ORLY, Financial) has recently experienced a daily loss of -3.2%, while its 3-month performance shows a modest gain of 0.84%. With an impressive Earnings Per Share (EPS) of 37.59, investors are keen to understand if the current stock price reflects the company's true value. Is O'Reilly Automotive fairly valued in the market today? This article delves into the company's valuation analysis, providing insights to investors looking to make an informed decision.
Company Introduction
O'Reilly Automotive Inc (ORLY, Financial) is a leading player in the aftermarket automotive parts industry, catering to both professional and DIY customers. With a diverse product range that includes both branded and own-label products, the company has established a strong presence with 5,971 stores across 47 U.S. states and 42 stores in Mexico as of the end of 2022. The company's stock is currently trading at $953.71 per share with a market cap of $56.40 billion, closely aligning with the GF Value of $940.96, suggesting a fair valuation. This comparison sets the stage for an in-depth analysis of O'Reilly Automotive's intrinsic value.
Summarize GF Value
The GF Value is a unique metric that estimates the intrinsic value of a stock based on historical trading multiples, a GuruFocus adjustment factor, and future business performance estimates. O'Reilly Automotive (ORLY, Financial) appears to be fairly valued when assessed against this measure. The GF Value suggests that the stock's fair market value is in line with its current trading price, indicating that the long-term return of its stock is likely to mirror the rate of its business growth.
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Financial Strength
Investing in companies with robust financial strength is crucial to minimize the risk of capital loss. O'Reilly Automotive's financial strength is fair, with a cash-to-debt ratio of 0.01, placing it lower than 97.03% of its peers in the Retail - Cyclical industry. This metric, along with the company's fair GuruFocus financial strength ranking, suggests a need for careful consideration before investing.
Profitability and Growth
Profitable companies like O'Reilly Automotive, which has maintained profitability for 10 consecutive years, present less investment risk. O'Reilly Automotive's strong operating margin of 20.16% outperforms 94.52% of its industry counterparts, indicating robust profitability. Furthermore, the company's revenue and EBITDA growth rates are impressive, reflecting healthy growth and potential for value creation for shareholders.
ROIC vs. WACC
An essential aspect of profitability is the comparison between Return on Invested Capital (ROIC) and the Weighted Average Cost of Capital (WACC). O'Reilly Automotive's ROIC of 28.09 is significantly higher than its WACC of 7.81, indicating efficient capital utilization and strong potential for investor returns.
Conclusion
In conclusion, O'Reilly Automotive (ORLY, Financial) is fairly valued according to the GF Value, with solid financials and excellent profitability. The company's growth prospects appear promising, placing it in a strong competitive position within the Retail - Cyclical industry. For those interested in a deeper financial analysis, O'Reilly Automotive's 30-Year Financials provide extensive insights.
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This article, generated by GuruFocus, is designed to provide general insights and is not tailored financial advice. Our commentary is rooted in historical data and analyst projections, utilizing an impartial methodology, and is not intended to serve as specific investment guidance. It does not formulate a recommendation to purchase or divest any stock and does not consider individual investment objectives or financial circumstances. Our objective is to deliver long-term, fundamental data-driven analysis. Be aware that our analysis might not incorporate the most recent, price-sensitive company announcements or qualitative information. GuruFocus holds no position in the stocks mentioned herein.
