Stock Analysis

Should You Investigate O'Reilly Automotive, Inc. (NASDAQ:ORLY) At US$955?

NasdaqGS:ORLY
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Let's talk about the popular O'Reilly Automotive, Inc. (NASDAQ:ORLY). The company's shares saw a decent share price growth in the teens level on the NASDAQGS over the last few months. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock’s share price. But what if there is still an opportunity to buy? Today I will analyse the most recent data on O'Reilly Automotive’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for O'Reilly Automotive

Is O'Reilly Automotive Still Cheap?

The stock is currently trading at US$955 on the share market, which means it is overvalued by 37% compared to my intrinsic value of $697.59. This means that the opportunity to buy O'Reilly Automotive at a good price has disappeared! Furthermore, O'Reilly Automotive’s share price also seems relatively stable compared to the rest of the market, as indicated by its low beta. If you believe the share price should eventually reach its true value, a low beta could suggest it is unlikely to rapidly do so anytime soon, and once it’s there, it may be hard to fall back down into an attractive buying range.

What kind of growth will O'Reilly Automotive generate?

earnings-and-revenue-growth
NasdaqGS:ORLY Earnings and Revenue Growth July 2nd 2023

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. With profit expected to grow by a double-digit 18% over the next couple of years, the outlook is positive for O'Reilly Automotive. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation.

What This Means For You

Are you a shareholder? It seems like the market has well and truly priced in ORLY’s positive outlook, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe ORLY should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on ORLY for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the positive outlook is encouraging for ORLY, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

So if you'd like to dive deeper into this stock, it's crucial to consider any risks it's facing. Every company has risks, and we've spotted 3 warning signs for O'Reilly Automotive (of which 1 makes us a bit uncomfortable!) you should know about.

If you are no longer interested in O'Reilly Automotive, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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.

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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.