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Springfield, Missouri-based O'Reilly Automotive, Inc. (ORLY) operates as one of the largest specialty retailers and suppliers of automotive aftermarket parts, tools, supplies, equipment, and accessories. With a market cap of $70.9 billion, O’Reilly operates over 6,200 stores in the United States, Mexico, and Canada.
The retailer has outpaced the broader market in 2024 but underperformed over the past 52-week period. ORLY stock gained 30.4% on a YTD basis and 25.5% over the past year, compared to the S&P 500 Index’s ($SPX) gains of 25.5% in 2024 and 31.3% over the past 52 weeks.
Zooming in further, O’Reilly has also outpaced SPDR S&P Retail ETF’s (XRT) 16.2% gains on a YTD basis and lagged behind XRT’s 31.5% returns over the past year.
Despite missing analysts' sales and earnings expectations, ORLY stock prices observed marginal gains in the trading session after the release of its Q3 earnings on Oct. 23. The company has observed broad-based consumer pressures and demand softness in both the professional and DIY sides of its business which led to a slower comps growth. The company reported 1.5% year-over-year growth in comparable store sales and opened 47 new stores during the quarter while reporting a 3.8% growth in net sales, reaching $4.4 billion, missing Wall Street’s topline expectations. Moreover, the company’s EPS of $11.41 also fell short of analysts’ consensus estimates by over 1%.
However, O'Reilly Automotive's longer-term business fundamentals have remained intact and the company is confident in core drivers of demand in the industry. Moreover, the company's full-year updated revenue guidance range of $16.6 billion to $16.8 billion, reassured investors' confidence.
For the current fiscal year, ending in December, analysts expect ORLY to report a 6.2% year-over-year growth in EPS to $40.85. The company’s earnings surprise history is mixed. It surpassed analysts’ earnings estimates twice over the past four quarters while missing on two other occasions.
ORLY stock has a consensus “Moderate Buy” rating overall. Among the 25 analysts covering the stock, 16 recommend “Strong Buy,” one advises “Moderate Buy,” and eight suggest a “Hold” rating.
This configuration is slightly more bullish than two months ago when 14 analysts recommended “Strong Buy” ratings.
On Oct. 25, TD Cowen analyst Max Rakhlenko maintained a “Buy” rating while raising the price target to $1375 indicating a nearly 11% upside potential to current price levels.
ORLY’s mean price target of $1,298.79 represents only a 4.8% premium to current price levels. Meanwhile, the Street-high price target of $1,400 suggests 13% upside potential.
