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O'Reilly Automotive: 4 Reasons To Buy

Jul. 15, 2023 4:44 AM ETO'Reilly Automotive, Inc. (ORLY)9 Comments


  • O'Reilly Automotive has shown consistent growth in revenue and free cash flow over the past decade, with a total growth of 116.71% and 405.90% respectively, driven by industry trends and strategic acquisitions.
  • The company's profitability metrics outperform the sector median due to its strong brand and operational efficiency; analysts predict solid earnings growth in the fiscal period ending in December 2023.
  • Despite competition from online rivals, O'Reilly's aggressive store growth strategy and investments in e-commerce position it for continued success.
An O"Reilly Auto Parts store in a suburban strip mall in the evening in Spokane, Washington USA

Kirk Fisher/iStock Editorial via Getty Images


O'Reilly Automotive, Inc. (NASDAQ:ORLY) is a prominent retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The company offers a comprehensive range of new and remanufactured automotive hard parts, maintenance items, and accessories, catering to both do-it-yourself and

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I seek to invest in companies with business models I understand and have a proven track record for growth and profitability, little to no debt, and selling for an attractive valuation. I believe holding a concentrated portfolio of these types of businesses will generate results, perhaps not immediately but eventually. "Rule Number One: Never Lose Money. Rule Number Two: Never Forget Rule Number One" - Warren Buffett

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Comments (9)

SamsSuperCereal profile picture
The buyback program is also pretty tremendous. Nobody institutionally is going to sell when they return so much value in buybacks.
George Spritzer, CFA profile picture
Hard to go wrong long term with either ORLY or AZO.
NantanLupan profile picture
Love this idea! But what about price risk, i.e. margin of safety?

Margin of safety: If you decline your growth rate from 11-12% to 5-6%, what happens to the DCF stock price?

Reversion to the Mean: If you decline it further from 5-6% to 2-3% to track GDP , what happens to the DCF stock price?

I'm looking to plot a range of stock prices for ORLY under various growth scenarios; then assign probability weightings to the best, middle, and worst case scenarios; then sum them up for probability-weighted or risk-adjusted "fair value" stock price for ORLY today.

Keep up the good work generating interesting company ideas!
Two things I tried to find in the article:
1) How it compares to Advance Auto which has a much bigger presence in my area of Chicago.
2) How the EV market, with no engines, is going to affect these auto suppliers.
( I didn't read every word, so apologize if I missed one of these).
The Pineapple Investor profile picture
@MRR Chicago Thanks for reading! I haven't done as much work into Advanced Auto Parts but I would give ORLY an edge in terms of growth and profitability while AAP has a better looking balance sheet and pays a dividend, ORLY does not. It's interesting that ORLY is more than 10x AAP in market cap but less than 2x AAP in employees. Overall, I think ORLY is the better run company.

Also, The growth of the EV market is likely to have a mixed impact on ORLY. On the one hand, the EV market is still relatively small, so it is not likely to have a significant impact on ORLY's sales in the near term. However, as the EV market grows, ORLY will need to adapt its business to meet the needs of EV owners. This could include expanding its product offerings to include EV parts and accessories, or investing in new technologies to service EVs.
Joe Younger profile picture
And...ORLY has one if the best 20-year charts in the market.
Good 👍 read but store count is 6k + , in the US . Long ORLY since $46
The Pineapple Investor profile picture
@Gadzman_33 Thank you for reading and congratulations on being long in ORLY since $46! That's an all time investment!
@The Pineapple Investor Thanks , that's been an investors dream stock ! Originally bought shares at April 1993 IPO ie $17, but bought more several times .
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