How much a stock’s price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you’d invested in O’Reilly Automotive (ORLY) ten years ago? It may not have been easy to hold on to ORLY for all that time, but if you did, how much would your investment be worth today?
O’Reilly Automotive’s Business In-Depth
With that in mind, let’s take a look at O’Reilly Automotive’s main business drivers.
O’Reilly Automotive, Inc. is a leading specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States. Founded in 1957, O’Reilly’s initially operated from a single store in Springfield, MO. The company’s stores offer several services and programs to customers, which include battery diagnostic testing, check engine light code extraction and loaner tool program, among others. The products offered by the company stores are vehicle accessories, such as floor mats and seat cover as well as maintenance items like antifreeze, engine additives, filters, fluids, lighting and wiper blades. Besides these, it provides new as well as remanufactured automotive hard parts like alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts and fuel pumps.
The company sells products to both Do-it-Yourself (DIY) customers and Do-it-for-Me (DIFM) or professional installers. It sells an extensive line of products consisting of new and remanufactured automotive hard parts (such as mufflers, brakes and shock absorbers), maintenance items, accessories, a complete range of auto body paint and related materials, automotive tools and professional service equipment. The company has a track record of over 20 years of following a dual-market strategy by serving both DIY and DIFM customers and is among the top three companies in both the markets.In 2020, the firm derived approximately 59% of our sales from DIY customers and approximately 41% of our sales from professional service provider customers.
The automotive aftermarket items industry is a highly competitive industry. O’Reilly’s presence in the market, customer service, product availability, store location, brand recognition price and store location position the company in a competitive position in the market among peers in the industry.The company’s omnichannel growth strategies are focused on offering customers an enhanced and seamless shopping experience through variety of digital and physical channels. The auto retailer has been expanding its physical presence through opening or acquiring stores while maintaining the existing ones. As of December 31, 2020, O’Reilly’s total store count was 5,594.
Anyone can invest, but building a successful investment portfolio takes a combination of a few things: research, patience, and a little bit of risk. So, if you had invested in O’Reilly Automotive a decade ago, you’re probably feeling pretty good about your investment today.
A $1000 investment made in July 2011 would be worth $9,162.26, or an 816.23% gain, as of July 14, 2021, according to our calculations. Investors should note that this return excludes dividends but includes price increases.
Compare this to the S&P 500’s rally of 231.57% and gold’s return of 9.50% over the same time frame.
Analysts are anticipating more upside for ORLY.
Customer-centric business model and growing demand for high-quality auto parts are likely to boost O’Reilly’s prospects. The auto parts retailer is poised to benefit from store openings and distribution centers in profitable regions. The company has a competitive edge due to dual market strategy by serving Do-it-Yourself (DIY) and Do-it-for-Me (DIFM) customers. While the company raised its comps and FCF guidance for 2021, it still compares unfavorably with 2020 levels. O’Reilly expects comparable store sales to rise 1-3% in 2021 versus 10.9% in 2020. The firm’s rising operating and capex costs thanks to store expansion and omnichannel marketing activities are set to dent margins and cash flows. Elevated leverage of around 97% restricts financial flexibility. As such, investors are recommended to wait for a better entry point.
Shares have gained 10.17% over the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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OReilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
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