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Stock splits have a way of stirring excitement in the market. They make shares more affordable, increasing liquidity and lowering barriers to entry for retail investors. History has shown that splits often generate excitement and offer retail investors an easier way in. Many investors see the lower per-share prices as a psychological win.
Now, O’Reilly Automotive (ORLY) is joining the list of high-profile splits. The auto parts retailer has delivered staggering growth over the past two decades, with shares surging over 5,307%. Now, its board of directors has approved a 15-for-1 split, pending shareholder approval. The split is designed to make stock ownership easier for employees through its stock purchase program. If approved, shareholders will receive 14 additional shares for every 1 held as of June 9. Trading on a split-adjusted basis would begin on June 10.
With a shareholder vote set for May 15, ORLY investors have a key window of opportunity. So, those eyeing a pre-split position, given ORLY’s double-digit upside potential, may want to act before the market adjusts.
About O’Reilly Automotive Stock
O'Reilly Automotive (ORLY) is an auto parts and accessories retailer serving both DIY customers and professional mechanics. With a $76.7 billion market capitalization, it spans the U.S., Puerto Rico, Mexico, and Canada, offering top-tier auto parts, tools, and services.
Earlier this month, ORLY stock hit its 52-week high of $1,389.05. The stock has returned 16.2% over the past year and climbed 20.1% in just the past six months alone.
From a valuation standpoint, ORLY is priced at 30.6 times forward earnings and 4.6 times sales, higher than its industry peers and historical averages. Yet, its strong growth trajectory and resilient demand justify the premium.
O’Reilly Delivers a Solid Q4 Report
O’Reilly kept its streak alive, delivering impressive Q4 earnings results on Feb. 5. It posted record revenue and operating income=. Sales jumped 7% year-over-year to $4.1 billion, edging past estimates. Operating income increased 3% to $739 million, reflecting 18% of sales. Earnings per share rose 3% to $9.50.
Q4 comparable store sales growth clocked in at 4.4%, fueled by DIYers and professionals. That strong finish lifted full-year comparable store sales growth to 2.9%, right at the top of its guidance range and representing its 32nd consecutive year of comparable store sales growth.
O’Reilly opened 198 new stores and relocated its Atlanta distribution center to a larger, more advanced facility. Cash flow was another highlight, with net cash from operations hitting $3.05 billion and free cash flow coming in at $2 billion.
Looking ahead to 2025, O’Reilly is not slowing down. The company plans to open 200 to 210 new stores and estimates between 2% and 4% comparable sales growth. Meanwhile, revenue is anticipated to be between $17.4 billion and $17.7 billion, while EPS is projected to land between $42.60 and $43.10, with free cash flow ranging from $1.6 billion to $1.9 billion. Net cash from operations is expected to be between $2.8 billion and $3.2 billion. With decades of momentum and a rock-solid playbook, O’Reilly is staying in the fast lane, ready to power another year of strong performance.
What Do Analysts Expect for O’Reilly Stock?
O’Reilly Automotive’s continued progress, resilient business model, stellar financials, and continuous market share gains are keeping Wall Street bullish on ORLY stock overall. For instance, BofA Securities is not budging on ORLY, holding firm on its “Buy” rating and $1,500 target.
Analyst Elizabeth Suzuki sees the auto parts giant gaining ground in both DIY and Pro segments, flexing a 51.2% gross margin for fiscal 2024 and steady revenue growth. She highlights vendor cost wins, international expansion, and a rock-solid supply chain as key levers for growth. ORLY also landed on BofA’s US 1 list, a batch of elite stocks with serious upside. O’Reilly’s engine appears to be running strong.
Overall, ORLY has a “Strong Buy” consensus rating, an upgrade from a “Moderate Buy” two months back. Out of the 27 analysts in coverage, 18 recommend a “Strong Buy,” two suggest a “Moderate Buy,” and the remaining seven analysts are on the sideline advising a “Hold.”
Meanwhile, the mean price target of $1,440.38 implies 6% upside in play. The street-high of $1,550 suggests the auto part retailer stock could rally as much as 14% from the current levels.
