Entering text into the input field will update the search result below

O'Reilly Automotive: Margin And Inventory Concerns

Jul. 14, 2023 6:56 PM ETO'Reilly Automotive, Inc. (ORLY)AZO, GPC3 Comments
The European View profile picture
The European View


  • O'Reilly Automotive, a leading provider of auto parts, tools and accessories, has seen a decrease in gross, operating and net margins, despite impressive growth and significant stock buyback programs.
  • The company's inventory has risen to $4.5 billion, a billion more than 2020, and its Free Cash Flow has been stagnating since Q4 2020.
  • Despite these concerns, O'Reilly's stock is currently overvalued with a P/E ratio of over 27, well above its historical multiple of 20.
  • All this leads to an unfavorable risk-reward ratio. Accordingly, I rate the stock only with a "hold".

Auto-Mechaniker-Service und Reparatur

mladenbalinovac/E+ via Getty Images

O'Reilly Automotive (NASDAQ:ORLY) has an outstanding growth engine. The company is one of the largest suppliers of automotive spare parts, tools, and accessories. Its customers include both professional and private customers. ORLY generates almost half of its $14.4 billion turnover

This article was written by

The European View profile picture
Runner of the TEV Blog | Private InvestorI am a long-term oriented investor and in my early thirties. I hold a law degree and a doctorate in law and love investing and talking about my and others' investments. I regularly write about my research and investments on various investor platforms and the TEV Blog. **My articles represent my opinion only and in no way constitute professional investment advice. It is the responsibility of the reader to conduct their due diligence and seek investment advice from a licensed professional before making any investment decisions.**

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

Recommended For You

Comments (3)

Good article. Have worked in the industry for a decade. ORLY is the best operator. Agree with your thesis that valuation is the biggest impediment to short term share price gain. Long term, however, this is a core holding in the space.
@ohhla2000 Thoughts on AAP?
@Basic_Huckleberry743 Like it a lot less than AZO and ORLY. In the commercial space, they have a lot work to do to catch up to AZO and ORLY. They generally go to market with sky-high prices to installers and turnover their buyers/category managers at HQ at an alarming frequency. DIY business is OK but not where the growth is. Don't see any more acquisitions in the pipeline either, especially with how slow the CQ acquisition has been to pay dividends.
That being said, share price is obviously depressed right now. Can definitely go much lower but it does get interesting in the low 40s just because the aftermarket business is a great business and the right person at the top can turn this thing around.
Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

About ORLY

SymbolLast Price% Chg
Market Cap
Yield (TTM)
Rev Growth (YoY)
Short Interest
Prev. Close
Compare to Peers

More on ORLY

Related Stocks

SymbolLast Price% Chg
To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.