Stock Analysis

What Is O'Reilly Automotive, Inc.'s (NASDAQ:ORLY) Share Price Doing?

NasdaqGS:ORLY
Source: Shutterstock

O'Reilly Automotive, Inc. (NASDAQ:ORLY) saw its share price hover around a small range of US$890 to US$969 over the last few weeks. But is this actually reflective of the share value of the large-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at O'Reilly Automotive’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.

See our latest analysis for O'Reilly Automotive

What Is O'Reilly Automotive Worth?

The stock seems fairly valued at the moment according to my valuation model. It’s trading around 9.67% above my intrinsic value, which means if you buy O'Reilly Automotive today, you’d be paying a relatively fair price for it. And if you believe that the stock is really worth $835.57, then there isn’t really any room for the share price grow beyond what it’s currently trading. In addition to this, O'Reilly Automotive has a low beta, which suggests its share price is less volatile than the wider market.

Can we expect growth from O'Reilly Automotive?

earnings-and-revenue-growth
NasdaqGS:ORLY Earnings and Revenue Growth October 12th 2023

Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. 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 17% 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 already priced in ORLY’s positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value?

Are you a potential investor? If you’ve been keeping an eye on ORLY, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it’s worth diving deeper into other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.

With this in mind, we wouldn't consider investing in a stock unless we had a thorough understanding of the risks. Our analysis shows 3 warning signs for O'Reilly Automotive (1 can't be ignored!) and we strongly recommend you look at them before investing.

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.

View the Free Analysis

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.