O'Reilly Automotive (ORLY): Valuation Check After Earnings Beat, Higher Guidance and Fresh Bullish Analyst Coverage

O'Reilly Automotive (ORLY) just picked up fresh bullish coverage after posting a quarter of better than expected revenue and earnings growth, and even nudging its full year guidance higher.

See our latest analysis for O'Reilly Automotive.

Even with the upbeat quarter and a wave of fresh bullish research, the stock has been choppy recently, with a 30 day share price return of 4.16%, a robust year to date share price return of 24.89%, and a 5 year total shareholder return of 231.15%. This suggests longer term momentum is still very much intact.

If O'Reilly's steady comp growth has you thinking about what else is working in autos, it might be worth exploring auto manufacturers as potential next ideas.

With analysts clustered around upbeat price targets and the shares already delivering hefty multiyear gains, investors now face a key question: Is O'Reilly still mispriced to the upside, or is the market fully discounting its future growth?

Most Popular Narrative: 10.1% Undervalued

With O'Reilly Automotive last closing at $98.89 against a narrative fair value of $110, the current setup leans toward a modest undervaluation story.

The company's commitment to store expansion, with the opening of 38 net new stores across the U.S. and Mexico in the first quarter, supports long term revenue growth potential by increasing market presence and customer reach.

Read the complete narrative.

Curious how steady, mid single digit growth can still justify such a rich future earnings multiple, even above the broader retail pack? The narrative leans on rising margins, shrinking share count, and a premium valuation normally reserved for fast growing compounders. Want to see the exact assumptions behind that confidence and how they stack up year by year? Read on to unpack the full playbook.

Result: Fair Value of $110 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, that upside case could be knocked off course by weaker consumer demand or unexpected tariff and wage pressures that squeeze margins harder than expected.

Find out about the key risks to this O'Reilly Automotive narrative.

Another View: Rich on Earnings Multiples

While the narrative fair value points to a 10.1% upside, the earnings multiple view is much harsher. At a 33.6x price to earnings ratio, O'Reilly trades well above its 19.9x fair ratio and the 18.4x industry average. This suggests investors are paying a steep premium that could easily unwind if growth underdelivers.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own O'Reilly Automotive Narrative

If you see things differently or want to stress test the numbers yourself, you can spin up a custom thesis in minutes: Do it your way.

A great starting point for your O'Reilly Automotive research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. 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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