Revisiting O'Reilly Automotive (ORLY) Valuation After Recent Share Price Pullback

What Is Happening With O'Reilly Automotive Right Now

O'Reilly Automotive (ORLY) has slipped about 4% over the past month and roughly 9% in the past 3 months, even as its year to date gain still sits above 20%.

See our latest analysis for O'Reilly Automotive.

Despite the recent pullback, O'Reilly's 20.2% year to date share price return and robust five year total shareholder return of 214.8% suggest long term momentum remains solid, even if near term enthusiasm is cooling.

If ORLY's pause has you reassessing the auto space, this could be a good moment to explore other auto manufacturers that might fit your watchlist.

With earnings still growing solidly and shares trading about 16% below the average analyst target, is this recent pullback offering an attractive entry point, or is the market already pricing in O'Reilly Automotive's next leg of growth?

Most Popular Narrative: 13.7% Undervalued

With O'Reilly Automotive last closing at $95.14 against a narrative fair value of $110.20, the story assumes more upside than the market currently does.

The analysts have a consensus price target of $106.955 for O'Reilly Automotive based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $120.0, and the most bearish reporting a price target of just $62.0.

Read the complete narrative.

Curious how steady mid single digit growth, firmer margins, and a rich future earnings multiple can still justify upside from here? The full narrative unpacks the exact revenue path, earnings power, and valuation multiple that need to line up almost perfectly to reach that fair value.

Result: Fair Value of $110.20 (UNDERVALUED)

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

However, that upside depends on consumer resilience and clean execution, with weather swings and potential tariff shocks both capable of denting comparable sales and margins.

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

Another Angle on Valuation

While the narrative framework points to O'Reilly Automotive trading about 13.7% below fair value, our price to earnings lens is far less forgiving. At roughly 32.3 times earnings, ORLY sits well above the US Specialty Retail average of 20.3 times and the 19.9 times fair ratio our model suggests the market could gravitate toward, implying downside risk if sentiment normalizes.

That leaves investors weighing a quality compounder premium against the chance that a rerating, not earnings, ends up driving the next big move. Which side of that trade are you really on?

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

Build Your Own O'Reilly Automotive Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a custom view in minutes with 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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