Stock Analysis

O'Reilly Automotive, Inc. (NASDAQ:ORLY) is largely controlled by institutional shareholders who own 86% of the company

  •  Updated
NasdaqGS:ORLY
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Every investor in O'Reilly Automotive, Inc. (NASDAQ:ORLY) should be aware of the most powerful shareholder groups. With 86% stake, institutions possess the maximum shares in the company. In other words, the group stands to gain the most (or lose the most) from their investment into the company.

Because institutional owners have a huge pool of resources and liquidity, their investing decisions tend to carry a great deal of weight, especially with individual investors. Hence, having a considerable amount of institutional money invested in a company is often regarded as a desirable trait.

Let's delve deeper into each type of owner of O'Reilly Automotive, beginning with the chart below.

Before we look at the ownership breakdown, you might like to know that our analysis indicates that ORLY is potentially undervalued!

ownership-breakdown
NasdaqGS:ORLY Ownership Breakdown September 22nd 2022

What Does The Institutional Ownership Tell Us About O'Reilly Automotive?

Institutional investors commonly compare their own returns to the returns of a commonly followed index. So they generally do consider buying larger companies that are included in the relevant benchmark index.

We can see that O'Reilly Automotive does have institutional investors; and they hold a good portion of the company's stock. This suggests some credibility amongst professional investors. But we can't rely on that fact alone since institutions make bad investments sometimes, just like everyone does. If multiple institutions change their view on a stock at the same time, you could see the share price drop fast. It's therefore worth looking at O'Reilly Automotive's earnings history below. Of course, the future is what really matters.

earnings-and-revenue-growth
NasdaqGS:ORLY Earnings and Revenue Growth September 22nd 2022

Investors should note that institutions actually own more than half the company, so they can collectively wield significant power. We note that hedge funds don't have a meaningful investment in O'Reilly Automotive. The Vanguard Group, Inc. is currently the company's largest shareholder with 8.4% of shares outstanding. With 7.2% and 4.1% of the shares outstanding respectively, BlackRock, Inc. and State Street Global Advisors, Inc. are the second and third largest shareholders.

After doing some more digging, we found that the top 24 have the combined ownership of 50% in the company, suggesting that no single shareholder has significant control over the company.

While it makes sense to study institutional ownership data for a company, it also makes sense to study analyst sentiments to know which way the wind is blowing. There are a reasonable number of analysts covering the stock, so it might be useful to find out their aggregate view on the future.

Insider Ownership Of O'Reilly Automotive

The definition of an insider can differ slightly between different countries, but members of the board of directors always count. Management ultimately answers to the board. However, it is not uncommon for managers to be executive board members, especially if they are a founder or the CEO.

I generally consider insider ownership to be a good thing. However, on some occasions it makes it more difficult for other shareholders to hold the board accountable for decisions.

Our most recent data indicates that insiders own some shares in O'Reilly Automotive, Inc.. Insiders own US$479m worth of shares (at current prices). It is good to see this level of investment. You can check here to see if those insiders have been buying recently.

General Public Ownership

The general public-- including retail investors -- own 13% stake in the company, and hence can't easily be ignored. This size of ownership, while considerable, may not be enough to change company policy if the decision is not in sync with other large shareholders.

Next Steps:

While it is well worth considering the different groups that own a company, there are other factors that are even more important. Be aware that O'Reilly Automotive is showing 3 warning signs in our investment analysis , and 1 of those is concerning...

But ultimately it is the future, not the past, that will determine how well the owners of this business will do. Therefore we think it advisable to take a look at this free report showing whether analysts are predicting a brighter future.

NB: Figures in this article are calculated using data from the last twelve months, which refer to the 12-month period ending on the last date of the month the financial statement is dated. This may not be consistent with full year annual report figures.

Valuation is complex, but we're helping make it simple.

Find out whether O'Reilly Automotive is potentially over or undervalued by checking out our comprehensive analysis, which includes fair value estimates, risks and warnings, dividends, insider transactions and financial health.

View the Free Analysis

About NasdaqGS:ORLY

O'Reilly Automotive

O'Reilly Automotive, Inc., together with its subsidiaries, operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States.

The Snowflake is a visual investment summary with the score of each axis being calculated by 6 checks in 5 areas.

Analysis AreaScore (0-6)
Valuation0
Future Growth1
Past Performance3
Financial Health2
Dividends0

Read more about these checks in the individual report sections or in our analysis model.

Acceptable track record with imperfect balance sheet.