Every day, countless drivers rely on O’Reilly Automotive, Inc. to keep their vehicles performing at their best. As a powerhouse in the auto parts industry, O’Reilly not only supplies essential components but also innovates with services that enhance customer experiences. With a robust reputation for quality and a vast retail network across the U.S. and Mexico, the company stands as a testament to resilience in a competitive market. As I delve into O’Reilly’s financial health and growth prospects, I ask: do its fundamentals still justify its current market valuation?
Table of contents
Company Description
O’Reilly Automotive, Inc. is a leading retailer and supplier of automotive aftermarket parts, tools, and accessories in the United States. Founded in 1957 and headquartered in Springfield, Missouri, the company operates over 5,759 stores across the U.S. and 25 locations in Mexico. O’Reilly specializes in providing a wide range of new and remanufactured hard parts, maintenance items, and accessories for domestic and imported vehicles. With a strong focus on customer service and enhanced programs such as battery recycling and diagnostic testing, O’Reilly positions itself as a vital player in the auto parts industry. The company’s commitment to innovation and quality strengthens its role in shaping the automotive aftermarket landscape.
Fundamental Analysis
In this section, I will analyze O’Reilly Automotive, Inc.’s income statement, financial ratios, and dividend payout policy to assess its financial health and investment potential.
Income Statement
The following table summarizes the income statement for O’Reilly Automotive, Inc. (ORLY) over the past several fiscal years, highlighting key financial metrics.
| Metric | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Revenue | 11.60B | 13.33B | 14.41B | 15.81B | 16.71B |
| Cost of Revenue | 5.52B | 6.31B | 7.03B | 7.71B | 8.15B |
| Operating Expenses | 3.67B | 4.10B | 4.43B | 4.92B | 5.30B |
| Gross Profit | 6.09B | 7.00B | 7.38B | 8.10B | 8.55B |
| EBITDA | 2.74B | 3.25B | 3.31B | 3.62B | 3.73B |
| EBIT | 2.43B | 2.93B | 2.96B | 3.21B | 3.27B |
| Interest Expense | 161M | 145M | 158M | 202M | 223M |
| Net Income | 1.75B | 2.16B | 2.17B | 2.35B | 2.39B |
| EPS | 1.58 | 2.09 | 2.25 | 2.59 | 2.73 |
| Filing Date | N/A | 2022-02-28 | 2023-02-28 | 2024-02-07 | 2025-02-28 |
Interpretation of Income Statement
O’Reilly Automotive has demonstrated strong growth in revenue, increasing from 11.60B in 2020 to 16.71B in 2024, reflecting a consistent upward trajectory. Net income also rose proportionally, reaching 2.39B in the latest fiscal year. Margins have remained relatively stable, with gross profit margins hovering around 48-51%, indicating efficient cost management. In 2024, although revenue growth continued, the rate appears to have slowed compared to previous years, suggesting potential market saturation or increased competition. However, the company maintained solid EBITDA, reflecting its operational resilience and ability to generate cash flow amidst changing market conditions.
Financial Ratios
Below is a summary of the financial ratios for O’Reilly Automotive, Inc. (ORLY) over the available years.
| Ratio | 2020 | 2021 | 2022 | 2023 | 2024 |
|---|---|---|---|---|---|
| Net Margin | 15.10% | 16.24% | 15.08% | 14.84% | 14.28% |
| ROE | 12.49% | -32.59% | -2.05% | -1.35% | -1.74% |
| ROIC | 28.14% | 36.88% | 38.77% | 37.72% | 36.26% |
| P/E | 19.06 | 22.50 | 25.01 | 24.49 | 28.98 |
| P/B | 238.17 | -733.24 | -51.22 | -33.03 | -50.46 |
| Current Ratio | 0.86 | 0.77 | 0.71 | 0.73 | 0.71 |
| Quick Ratio | 0.16 | 0.14 | 0.10 | 0.12 | 0.09 |
| D/E | 43.95 | -88.32 | -6.17 | -4.51 | -5.78 |
| Debt-to-Assets | 53.16% | 50.06% | 51.83% | 56.52% | 53.18% |
| Interest Coverage | 15.04 | 20.24 | 18.78 | 15.81 | 14.61 |
| Asset Turnover | 1.00 | 1.14 | 1.14 | 1.14 | 1.12 |
| Fixed Asset Turnover | 1.91 | 2.15 | 2.20 | 2.18 | 2.11 |
| Dividend Yield | 0% | 0% | 0% | 0% | 0% |
Interpretation of Financial Ratios
Analyzing O’Reilly Automotive, Inc. (ORLY) as of FY 2024, I find several notable financial ratios that provide insight into the company’s financial health. The liquidity ratios are concerning, with a current ratio of 0.705 and a quick ratio of 0.090, indicating potential short-term solvency issues. The solvency ratio at 0.175 suggests a significant reliance on debt, reflected in a debt-to-assets ratio of 0.532. Profitability ratios are relatively strong, with a net profit margin of 14.28% and an EBITDA margin of 23.25%, indicating good operational efficiency. However, the return on equity is negative at -1.74%, raising concerns about shareholder value. Overall, while ORLY shows robust profitability, its liquidity and solvency ratios warrant caution for potential investors.
Evolution of Financial Ratios
Over the past five years, ORLY’s liquidity ratios have gradually worsened, with the current ratio declining from 0.855 in 2020 to 0.705 in 2024. Conversely, profitability ratios have shown some improvement, particularly in net profit margins, which increased from 15.10% in 2020 to 14.28% in 2024.
Distribution Policy
O’Reilly Automotive, Inc. (ORLY) does not currently pay dividends, reflecting its strategy focused on reinvestment for growth and expansion. This approach is typical for companies in high-growth phases that prioritize research and development, or acquisitions. Despite the absence of dividends, ORLY engages in share buyback programs, using excess cash to enhance shareholder value. Overall, this distribution strategy appears aligned with sustainable long-term value creation for shareholders, given the company’s growth prospects.
Sector Analysis
O’Reilly Automotive, Inc. is a leading player in the auto parts retail industry, offering a wide range of automotive aftermarket products and services in the U.S. and Mexico.
Strategic Positioning
O’Reilly Automotive, Inc. (ORLY) commands a strong position in the U.S. automotive aftermarket, with a market cap of approximately $83.6B. The company has successfully captured a significant market share in the auto parts sector, bolstered by its extensive network of 5,759 stores. Competitive pressure from retailers like AutoZone and Advance Auto Parts remains a constant threat, particularly with the rise of e-commerce. Technological advancements, such as online sales platforms, are disrupting traditional retail, but O’Reilly’s emphasis on customer service and in-store expertise helps mitigate these risks.
Key Products
O’Reilly Automotive, Inc. offers a wide range of products that cater to both DIY customers and professional service providers in the automotive aftermarket industry. Below is a summary of their key products:
| Product | Description |
|---|---|
| Automotive Hard Parts | New and remanufactured parts including alternators, batteries, brake components, and engine parts. |
| Maintenance Items | Essential products such as oil, antifreeze, filters, and fluids necessary for vehicle upkeep. |
| Automotive Accessories | Items like floor mats, seat covers, and truck accessories that enhance vehicle aesthetics and utility. |
| Tools and Equipment | A comprehensive selection of automotive tools and equipment for both professional and DIY use. |
| Repair Services | Services such as battery testing, oil recycling, and drum resurfacing offered at their retail locations. |
| Paint and Body Supplies | Auto body paint and related materials for repair and enhancement of vehicle exteriors. |
These products reflect O’Reilly’s commitment to providing quality parts and services to meet the diverse needs of their customer base.
Main Competitors
In the competitive landscape of the automotive aftermarket parts industry, several key players vie for market share alongside O’Reilly Automotive, Inc.
| Company | Market Cap |
|---|---|
| NIKE, Inc. | 97.35B |
| Starbucks Corporation | 96.79B |
| Carvana Co. | 86.67B |
| O’Reilly Automotive, Inc. | 83.57B |
| Marriott International, Inc. | 78.52B |
| Airbnb, Inc. | 76.89B |
| General Motors Company | 70.95B |
| Royal Caribbean Cruises Ltd. | 70.27B |
| Ferrari N.V. | 70.21B |
| AutoZone, Inc. | 64.18B |
| Hilton Worldwide Holdings Inc. | 63.28B |
The automotive aftermarket parts sector is marked by significant competition, with O’Reilly Automotive, Inc. holding a robust position in the U.S. market. Its rivals, including AutoZone and Carvana, also focus on providing essential automotive products and services, contributing to a dynamic and evolving industry landscape.
Competitive Advantages
O’Reilly Automotive, Inc. (ORLY) boasts a robust competitive edge in the automotive aftermarket industry, primarily due to its extensive network of 5,759 stores and a comprehensive product range that includes both new and remanufactured automotive parts. Its focus on customer service, including specialized programs like tool loans and battery diagnostics, enhances customer loyalty. Looking ahead, O’Reilly is poised to capitalize on growth opportunities through the introduction of innovative products and potential market expansion into underserved regions, thereby solidifying its market position and driving future revenue growth.
SWOT Analysis
This SWOT analysis aims to provide a comprehensive overview of O’Reilly Automotive, Inc. to aid in strategic decision-making.
Strengths
- Strong market position
- Extensive product range
- Robust supply chain
Weaknesses
- Dependence on U.S. market
- Limited dividend history
- High competition
Opportunities
- Growing automotive aftermarket
- Expansion into new markets
- Increasing vehicle electrification
Threats
- Economic downturns
- Supply chain disruptions
- Changes in consumer preferences
The overall SWOT assessment indicates that O’Reilly Automotive has a solid foundation with significant strengths and opportunities, yet it must navigate several external threats and internal weaknesses. A strategic focus on diversifying markets and enhancing competitive advantages could bolster its long-term growth.
Stock Analysis
Over the past year, O’Reilly Automotive, Inc. (ORLY) has demonstrated significant price movements, with a notable bullish trend despite recent fluctuations. The stock has experienced varying dynamics, reflecting both strong investor interest and market volatility.
Trend Analysis
Analyzing ORLY’s performance over the past 12 months, the stock has seen a remarkable price increase of 55.63%. This substantial percentage change indicates a bullish trend overall. However, in the recent period from September 21, 2025, to December 7, 2025, the stock experienced a decline of 4.85%, suggesting a bearish movement in the short term. The overall trend shows signs of deceleration, with the highest price recorded at 107.5 and the lowest at 63.54, alongside a standard deviation of 12.01 illustrating considerable volatility.
Volume Analysis
In the last three months, ORLY’s total trading volume reached approximately 4.86B, with buyer-driven activity accounting for 54.63% of this volume, indicating a generally positive investor sentiment. However, recent trends show that volume is increasing, even though the last few weeks have been slightly seller-dominant, with buyers contributing only 40.61% of the latest trading volumes from September 21, 2025, to December 7, 2025. This shift suggests a cautious market participation as investors weigh potential risks against the stock’s previous bullish performance.
Analyst Opinions
Recent analyst recommendations for O’Reilly Automotive, Inc. (ORLY) have leaned toward a cautious stance, with a consensus rating of “Hold.” Analysts highlight the company’s strong discounted cash flow score of 4, indicating solid future cash generation potential. However, concerns about its return on equity (score of 1) and price-to-book ratio (score of 1) suggest that investors should proceed with caution. Notably, analysts emphasize the need for robust risk management given the current market volatility. Overall, I believe it’s prudent to monitor ORLY closely before making investment decisions.
Stock Grades
O’Reilly Automotive, Inc. (ORLY) has received consistent grades from several reputable grading companies, reflecting a stable outlook in the market.
| Grading Company | Action | New Grade | Date |
|---|---|---|---|
| Barclays | maintain | Equal Weight | 2025-10-27 |
| Goldman Sachs | maintain | Buy | 2025-10-24 |
| RBC Capital | maintain | Outperform | 2025-10-24 |
| Morgan Stanley | maintain | Overweight | 2025-10-23 |
| UBS | maintain | Buy | 2025-10-15 |
| Wells Fargo | maintain | Overweight | 2025-10-15 |
| TD Cowen | maintain | Buy | 2025-09-15 |
| Evercore ISI Group | maintain | Outperform | 2025-08-12 |
| Barclays | maintain | Equal Weight | 2025-07-25 |
| Evercore ISI Group | maintain | Outperform | 2025-07-25 |
Overall, the trend in grades for ORLY indicates a strong performance with multiple “Buy” and “Outperform” ratings, suggesting that analysts have a positive outlook on the stock’s future performance. The consistency in grades across various firms also reflects confidence in the company’s stability.
Target Prices
The consensus target price for O’Reilly Automotive, Inc. indicates a positive outlook among analysts.
| Target High | Target Low | Consensus |
|---|---|---|
| 121 | 91 | 112.18 |
Overall, analysts expect O’Reilly’s stock to perform well, with a target consensus of approximately 112.18, suggesting room for growth.
Consumer Opinions
Consumer sentiment surrounding O’Reilly Automotive, Inc. (ORLY) reflects a mixed bag of experiences, showcasing both commendable service and areas for improvement.
| Positive Reviews | Negative Reviews |
|---|---|
| Excellent customer service and knowledgeable staff. | Some locations have inconsistent stock levels. |
| Competitive pricing on auto parts and tools. | Limited online inventory availability. |
| Fast and efficient checkout process. | Occasional issues with product quality. |
Overall, consumer feedback highlights O’Reilly’s exceptional customer service and competitive pricing as key strengths, while stock inconsistencies and product quality concerns are recurring weaknesses.
Risk Analysis
In evaluating O’Reilly Automotive, Inc. (ORLY), it is crucial to consider the following risks that could impact the company’s performance.
| Category | Description | Probability | Impact |
|---|---|---|---|
| Market Risk | Fluctuations in consumer demand for automotive parts. | High | High |
| Supply Chain Risk | Disruptions in the supply chain affecting inventory. | Medium | High |
| Regulatory Risk | Changes in automotive regulations impacting operations. | Medium | Medium |
| Competitive Risk | Increased competition from online retailers. | High | Medium |
| Economic Risk | Economic downturn affecting consumer spending. | Medium | High |
The most significant risks for O’Reilly include high market and competitive risks, compounded by potential supply chain disruptions. Recent data shows that consumer preferences are shifting, which could affect sales dynamics in the automotive parts sector.
Should You Buy O’Reilly Automotive, Inc.?
O’Reilly Automotive, Inc. demonstrates robust profitability with a net income of 2.39B for FY 2024, reflecting a net profit margin of 14.28%. The company has been creating value, as evidenced by a return on invested capital (ROIC) of 36.26%, significantly exceeding its weighted average cost of capital (WACC) of 6.30%. However, O’Reilly carries substantial debt, with a total debt of 7.92B, leading to a debt-to-equity ratio of 0.096. The company’s rating stands at B-, indicating moderate performance amidst its financial evolution.
Favorable signals
The company O’Reilly Automotive, Inc. demonstrates several favorable elements, including a positive gross margin of 51.2%, a net margin of 14.28%, and an EBIT margin of 19.56%. Additionally, the company shows favorable growth in gross profit at 5.55% and a high return on invested capital (ROIC) of 36.26%, which significantly exceeds the weighted average cost of capital (WACC) of 6.3%. Furthermore, the interest coverage ratio of 14.68 indicates that the company can comfortably meet its interest obligations.
Unfavorable signals
Despite the favorable aspects, there are significant unfavorable elements to consider. The return on equity (ROE) is notably negative at -174.09%, indicating poor performance in generating returns for shareholders. The price-to-earnings (PE) ratio stands at 28.98, which could suggest the stock is overvalued. Additionally, the current ratio of 0.71 and the quick ratio of 0.09 point to potential liquidity challenges. The debt-to-assets ratio of 53.18% further highlights concerns regarding financial leverage.
Conclusion
In summary, while O’Reilly Automotive exhibits favorable indicators that might appeal to long-term investors, the presence of unfavorable signals such as negative ROE and liquidity concerns suggests caution. Given the recent seller volume exceeding buyer volume, it may be prudent to wait for buyers to return before making any investment decisions.
Disclaimer: This article is not financial advice. Each investor is responsible for their own investment decisions.
Additional Resources
- EverSource Wealth Advisors LLC Raises Stock Position in O’Reilly Automotive, Inc. $ORLY – MarketBeat (Dec 06, 2025)
- O’Reilly Automotive, Inc. (NASDAQ:ORLY) is a favorite amongst institutional investors who own 86% – Yahoo Finance (Dec 03, 2025)
- O’Reilly Automotive Stock Jump Looks Great, But How Secure Is That Gain? – Trefis (Dec 06, 2025)
- Is O’Reilly Automotive Stock Underperforming the Nasdaq? – Barchart.com (Dec 02, 2025)
- Baird Initiates Coverage of O’Reilly Automotive (ORLY) with Outperform Recommendation – Nasdaq (Dec 05, 2025)
For more information about O’Reilly Automotive, Inc., please visit the official website: oreillyauto.com
