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O'Reilly Automotive Intrinsic Value: DCF (FCF Based)

: $1,370.68 (As of Today)
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As of today (2022-08-10), O'Reilly Automotive's intrinsic value calculated from the Discounted Cash Flow model is $1,370.68.

Note: Discounted Cash Flow model is only suitable for predictable companies (Business Predictability Rank higher than 1-Star). If the company's predictability rank is 1-Star or Not Rated, result may not be accurate due to the low predictability of business and the data will not be stored into our database.

O'Reilly Automotive's Predictability Rank is 5-Stars.

Margin of Safety (FCF Based) using Discounted Cash Flow model for O'Reilly Automotive is 46.95%.

The industry rank for O'Reilly Automotive's Intrinsic Value: DCF (FCF Based) or its related term are showing as below:

ORLY's Price-to-DCF (FCF Based) is ranked better than
65.91% of 88 companies
in the Retail - Cyclical industry
Industry Median: 0.68 vs ORLY: 0.53

O'Reilly Automotive Intrinsic Value: DCF (FCF Based) Historical Data

The historical data trend for O'Reilly Automotive's Intrinsic Value: DCF (FCF Based) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

O'Reilly Automotive Annual Data
Trend Dec12 Dec13 Dec14 Dec15 Dec16 Dec17 Dec18 Dec19 Dec20 Dec21
Intrinsic Value: DCF (FCF Based)
Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 141.71 201.32 204.71 1,489.81 1,669.83

O'Reilly Automotive Quarterly Data
Sep17 Dec17 Mar18 Jun18 Sep18 Dec18 Mar19 Jun19 Sep19 Dec19 Mar20 Jun20 Sep20 Dec20 Mar21 Jun21 Sep21 Dec21 Mar22 Jun22
Intrinsic Value: DCF (FCF Based) Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1,490.32 1,558.09 1,669.83 1,412.34 1,370.68

O'Reilly Automotive Intrinsic Value: DCF (FCF Based) Calculation

This is the intrinsic value calculated from the Discounted Cash Flow model with default parameters. In a discounted cash flow model, the future cash flow is estimated based on a cash flow growth rate and a discount rate. The cash flow of the future is discounted to its current value at the discount rate. All of the discounted future cash flow is added together to get the current intrinsic value of the company.

Usually a two-stage model is used when calculating a stock's intrinsic value using a discounted cash flow model. The first stage is called the growth stage; the second is called the terminal stage. In the growth stage the company grows at a faster rate. Because it cannot grow at that rate forever, a lower rate is used for the terminal stage.

GuruFocus DCF calculator is a two-stage model. The default values are defined as:

1. Discount Rate: d = 9%
A reasonable discount rate assumption should be at least the long term average return of the stock market, which can be estimated from risk free rate plus risk premium of stock market. We used the 10-Year Treasury Constant Maturity Rate as the risk free rate and rounded up to the nearest integer, then added a risk premium of 6% to get the estimated discount rate. Some investors use their expected rate of return, which is also reasonable. A typical discount rate can be anywhere between 6% - 20%.

2. Growth Rate in the growth stage: g1 = 20%
Growth Rate in the growth stage = average free cash flow growth rate in the past 10 years. If it is higher than 20%, we use 20%. If it is less than 5%, we use 5% instead. => Average Free Cash Flow Growth Rate in the past 10 years was 20% which is NO less than 20% => Growth Rate: 20%

3. Years of Growth Stage: y1 = 10

4. Terminal Growth Rate: g2 = 4%

5. Years of Terminal Growth: y2 = 10

6. Free Cash Flow per Share: fcf = $36.062.
However, GuruFocus DCF calculator is actually a Discounted Earnings calculator, the EPS without NRI is used as the default. The reason we are doing this is we found that historically stock prices are more correlated with earnings than free cash flow.

All of the default settings can be changed and the results are calculated automatically.

O'Reilly Automotive's Intrinsic Value: DCF (FCF Based) for today is calculated as

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[(1+g1)/(1+d)+(1+g1)^2/(1+d)^2+...+(1+g1)^10/(1+d)^10]
+(1+g1)^10/(1+d)^10*[(1+g2)/(1+d)+(1+g2)^2/(1+d)^2+...+(1+g2)^10/(1+d)^10]}

set x = (1+g1)/(1+d) = (1+0.2)/(1+0.09) = 1.1009174311927
and y = (1+g2)/(1+d) = (1+0.04)/(1+0.09) = 0.95412844036697

Intrinsic Value: DCF (FCF Based)=Free Cash Flow per Share*{[x+x^2+...+x^10]+x^10*[y+y^2+...+y^10]}
=Free Cash Flow per Share*[x*(1-x^10)/(1-x)+x^10*y*(1-y^10)/(1-y)]
=36.062*38.009
=1,370.68

Margin of Safety (FCF Based)=(Intrinsic Value: DCF (FCF Based)-Current Price)/Intrinsic Value: DCF (FCF Based)
=(1370.68-727.155)/1370.68
=46.95 %

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.


O'Reilly Automotive  (NAS:ORLY) Intrinsic Value: DCF (FCF Based) Explanation

Unlike valuation methods such as Net Current Asset Value, Tangible Book per Share, Graham Number, Median PS Value etc, discounted Cash Flow model evaluates the companies based on their future earnings power instead of their assets.


Be Aware

What you need to know about the DCF model:

1. The DCF model evaluates a company based on its future earnings power
2. Growth is taken into account; therefore a faster growth company is worth more if everything else is the same.
3. Since we are projecting future growth, it is assumed that the company will grow at the same rate as it did during the past 10 years. Therefore this model works better for the companies that have relatively consistent performance.
4. The DCF model works poorly for inconsistent performers such as cyclicals.
5. What discount rate should you use? Your expected return from the investment is a good discount rate assumption.
6. A larger margin of safety should be required for companies with less predictable businesses.

You can screen for stocks that trade below their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) with the GuruFocus All-in-One Screener. Companies with a high Predictability Rank that trade at a discount to their Intrinsic Value: DCF (FCF Based) and Intrinsic Value: DCF (Earnings Based) can be found in the screen of Undervalued Predictable Companies.


O'Reilly Automotive Intrinsic Value: DCF (FCF Based) Related Terms

Thank you for viewing the detailed overview of O'Reilly Automotive's Intrinsic Value: DCF (FCF Based) provided by GuruFocus.com. Please click on the following links to see related term pages.


O'Reilly Automotive Business Description

O'Reilly Automotive logo
Address
233 South Patterson Avenue, Springfield, MO, USA, 65802
O'Reilly Automotive is one of the largest sellers of aftermarket automotive parts, tools, and accessories, serving professional and DIY customers (41% and 59% of 2021 sales, respectively). The company sells branded as well as own-label products, with the latter category comprising nearly half of sales. O'Reilly had 5,784 stores as of the end of 2021, spread across 47 U.S. states and including 25 stores in Mexico. The firm serves professional and DIY customers through its store network and also boasts approximately 750 sales personnel targeting commercial buyers.
Executives
Merz Mark Joseph officer: SVP OF FINANCE 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Mancini Christopher Andrew officer: SVP OF CENTRAL STORE OPS/SALES 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Rogers Charles Francis officer: SVP OF PRO SALES & OPS SUPPORT 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Whitfield Fred Alan director 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Sastre Maria director C/O DARDEN RESTAURANTS, INC. 1000 DARDEN CENTER DRIVE ORLANDO FL 32837
Weiss Andrea director 23 RAMRAPO COURT WEST GLENROCK NJ 07452
Andrews Jonathan Wyatt officer: SVP OF HR & TRAINING 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Kirby Brent Gentry officer: SVP OF OMNICHANNEL 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Venosdel Richard Darin officer: SVP OF INVENTORY MANAGEMENT 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Bragg Doug D officer: SVP OF CENTRAL STORE OPS/SALES 233 SOUTH PATTERSON AVE SPRINGFIELD MO 65802
Tarrant Jason Lee officer: SVP OF WESTERN STORE OPS/SALES 233 SOUTH PATTERSON AVENUE SPRINGFIELD MO 65802
Perlman Dana director C/O 200 MADISON AVENUE NEW YORK NY 10016
Fletcher Jeremy Adam officer: SVP OF FINANCE/CONTROLLER 233 SOUTH PATTERSON AVE SPRINGFIELD MO 65802
Dumas Robert Allen officer: SVP OF EASTERN STORE OPS/SALES 233 S PATTERSON AVE SPRINGFIELD MO 65802
Wilbanks Carl David officer: SVP OF MERCHANDISE 233 SOUTH PATTERSON AVE SPRINGFIELD MO 65802

O'Reilly Automotive Headlines

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