Morgan Stanley has raised its price target for O'Reilly Automotive (ORLY, Financial) to $1,580, up from the previous target of $1,450, while maintaining an Overweight rating on the stock. This adjustment reflects the firm's confidence in O'Reilly's ability to expand its market share within the promising Auto Parts retail sector, which is expected to boost earnings.
Despite achieving better-than-expected sales, O'Reilly's first-quarter results showed only modest profit growth. Nevertheless, Morgan Stanley maintains its positive outlook for the company as it continues to capture a larger share of the market. This reinforces the bullish perspective on O'Reilly's future performance.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 22 analysts, the average target price for O'Reilly Automotive Inc (ORLY, Financial) is $1,456.96 with a high estimate of $1,600.00 and a low estimate of $1,110.12. The average target implies an upside of 8.09% from the current price of $1,347.89. More detailed estimate data can be found on the O'Reilly Automotive Inc (ORLY) Forecast page.
Based on the consensus recommendation from 31 brokerage firms, O'Reilly Automotive Inc's (ORLY, Financial) average brokerage recommendation is currently 2.1, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for O'Reilly Automotive Inc (ORLY, Financial) in one year is $1213.60, suggesting a downside of 9.96% from the current price of $1347.89. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the O'Reilly Automotive Inc (ORLY) Summary page.
ORLY Key Business Developments
Release Date: February 06, 2025
- Comparable Store Sales Growth (Q4 2024): 4.4%
- Comparable Store Sales Growth (Full Year 2024): 2.9%
- Diluted Earnings Per Share Growth (Full Year 2024): 5.7%
- Fourth Quarter Charge Impact on EPS: $0.46 headwind due to a $35 million charge
- Gross Margin (Q4 2024): 51.3%
- Gross Margin (Full Year 2024): 51.2%
- SG&A Expense as a Percent of Sales (Q4 2024): 33.3%
- Average Per Store SG&A Expense Growth (Full Year 2024): 4.6%
- Revenue Increase (Q4 2024): $264 million
- Effective Tax Rate (Q4 2024): 19.6%
- Free Cash Flow (Full Year 2024): $2 billion
- AP to Inventory Ratio (End of Q4 2024): 128%
- Adjusted Debt to EBITDA Ratio (End of Q4 2024): 1.99 times
- Share Repurchases (Full Year 2024): 1.9 million shares at an average price of $1,072
- Store Count (End of 2024): Over 6,300 stores
- New Store Openings (2024): 25 new stores in Mexico
- Capital Expenditures (Full Year 2024): Just over $1 billion
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- O'Reilly Automotive Inc (ORLY, Financial) reported a 4.4% increase in comparable store sales for the fourth quarter, which was at the high end of their expectations.
- The company achieved a 2.9% increase in comparable store sales for the full year 2024, marking the 32nd consecutive year of growth in this metric.
- O'Reilly Automotive Inc (ORLY) plans to open 200 to 210 net new stores in 2025, reflecting confidence in their ability to balance organic growth with greenfield expansion.
- The company is investing in distribution capabilities, with new distribution centers in Stafford, Virginia, and expansions in Lakeland, Florida, to enhance inventory availability.
- O'Reilly Automotive Inc (ORLY) maintained a strong gross margin of 51.3% in the fourth quarter, consistent with the previous year, and expects further expansion in 2025.
Negative Points
- The company faced a $35 million charge in the fourth quarter to adjust auto claims self-insurance liabilities, impacting EPS growth by over 1% for the full year.
- O'Reilly Automotive Inc (ORLY) reported continued softness in discretionary categories such as tools, accessories, and performance parts due to consumer pressure.
- The company's guidance for 2025 comparable store sales growth is set at a lower range of 2% to 4%, reflecting cautiousness about potential economic challenges.
- Free cash flow for 2025 is expected to decrease to a range of $1.6 billion to $1.9 billion, driven by increased capital expenditures and inventory investments.
- The company anticipates a slight decline in DIY traffic in 2025 due to increased parts quality and extended service intervals, despite expecting higher ticket values.
