The worst result, after buying shares in a company (assuming no leverage), would be if you lose all the money you put in. But in contrast you can make much more than 100% if the company does well. To wit, the O'Reilly Automotive, Inc. (NASDAQ:ORLY) share price has flown 111% in the last three years. Most would be happy with that. It's also good to see the share price up 27% over the last quarter. The company reported its financial results recently; you can catch up on the latest numbers by reading our company report.
To paraphrase Benjamin Graham: Over the short term the market is a voting machine, but over the long term it's a weighing machine. One imperfect but simple way to consider how the market perception of a company has shifted is to compare the change in the earnings per share (EPS) with the share price movement.
O'Reilly Automotive was able to grow its EPS at 26% per year over three years, sending the share price higher. We note that the 28% yearly (average) share price gain isn't too far from the EPS growth rate. Coincidence? Probably not. This suggests that sentiment and expectations have not changed drastically. Rather, the share price has approximately tracked EPS growth.
You can see below how EPS has changed over time (discover the exact values by clicking on the image).
We know that O'Reilly Automotive has improved its bottom line lately, but is it going to grow revenue? Check if analysts think O'Reilly Automotive will grow revenue in the future.
A Different Perspective
O'Reilly Automotive provided a TSR of 43% over the last twelve months. But that was short of the market average. On the bright side, that's still a gain, and it's actually better than the average return of 16% over half a decade It is possible that returns will improve along with the business fundamentals. While it is well worth considering the different impacts that market conditions can have on the share price, there are other factors that are even more important. Even so, be aware that O'Reilly Automotive is showing 3 warning signs in our investment analysis , and 1 of those can't be ignored...
We will like O'Reilly Automotive better if we see some big insider buys. While we wait, check out this free list of growing companies with considerable, recent, insider buying.
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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