Stock Analysis

Why O'Reilly Automotive, Inc. (NASDAQ:ORLY) Could Be Worth Watching

NasdaqGS:ORLY
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O'Reilly Automotive, Inc. (NASDAQ:ORLY) received a lot of attention from a substantial price movement on the NASDAQGS over the last few months, increasing to US$996 at one point, and dropping to the lows of US$872. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether O'Reilly Automotive's current trading price of US$953 reflective of the actual 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.

View our latest analysis for O'Reilly Automotive

Is O'Reilly Automotive Still Cheap?

The stock seems fairly valued at the moment according to our valuation model. It’s trading around 12.61% above our intrinsic value, which means if you buy O'Reilly Automotive today, you’d be paying a relatively reasonable price for it. And if you believe the company’s true value is $846.34, there’s only an insignificant downside when the price falls to its real value. In addition to this, O'Reilly Automotive has a low beta, which suggests its share price is less volatile than the wider market.

What does the future of O'Reilly Automotive look like?

earnings-and-revenue-growth
NasdaqGS:ORLY Earnings and Revenue Growth January 14th 2024

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 16% 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? ORLY’s optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven’t considered today, such as the track record of its management team. 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 tabs 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 further examining 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. For example, O'Reilly Automotive has 3 warning signs (and 1 which can't be ignored) we think 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.