Shares of O'Reilly Automotive (
ORLY Quick Quote ORLY - Free Report) have been strong performers lately, with the stock up 5% over the past month. The stock hit a new 52-week high of $633.12 in the previous session. O'Reilly Automotive has gained 39% since the start of the year compared to the -6.4% move for the Zacks Retail-Wholesale sector and the 40.7% return for the Zacks Automotive - Retail and Wholesale - Parts industry. What's Driving the Outperformance?
The stock has a great record of positive earnings surprises, as it hasn't missed our earnings consensus estimate in any of the last four quarters. In its last earnings report on July 28, 2021, O'Reilly Automotive reported EPS of $8.33 versus consensus estimate of $7.28.
For the current fiscal year, O'Reilly Automotive is expected to post earnings of $27.65 per share on $12.6 billion in revenues. This represents a 17.51% change in EPS on an 8.62% change in revenues. For the next fiscal year, the company is expected to earn $29.3 per share on $12.98 billion in revenues. This represents a year-over-year change of 5.96% and 2.98%, respectively.
O'Reilly Automotive may be at a 52-week high right now, but what might the future hold for the stock? A key aspect of this question is taking a look at valuation metrics in order to determine if the company is due for a pullback from this level.
On this front, we can look at the Zacks Style Scores, as they provide investors with an additional way to sort through stocks (beyond looking at the Zacks Rank of a security). These styles are represented by grades running from A to F in the categories of Value, Growth, and Momentum, while there is a combined VGM Score as well. Investors should consider the style scores a valuable tool that can help you to pick the most appropriate Zacks Rank stocks based on their individual investment style.
O'Reilly Automotive has a Value Score of C. The stock's Growth and Momentum Scores are A and F, respectively, giving the company a VGM Score of B.
In terms of its value breakdown, the stock currently trades at 22.8X current fiscal year EPS estimates. On a trailing cash flow basis, the stock currently trades at 22X versus its peer group's average of 20.4X. Additionally, the stock has a PEG ratio of 1.61. This isn't enough to put the company in the top echelon of all stocks we cover from a value perspective.
We also need to consider the stock's Zacks Rank, as this supersedes any trend on the style score front. Fortunately, O'Reilly Automotive currently has a Zacks Rank of #2 (Buy) thanks to favorable earnings estimate revisions from covering analysts.
Since we recommend that investors select stocks carrying Zacks Rank of 1 (Strong Buy) or 2 (Buy) and Style Scores of A or B, it looks as if O'Reilly Automotive fits the bill. Thus, it seems as though O'Reilly Automotive shares could have potential in the weeks and months to come.
How Does O'Reilly Automotive Stack Up to the Competition?
Shares of O'Reilly Automotive have been moving higher, and the company still appears to be a decent choice, but what about the rest of the industry? Some of its industry peers are also looking good, including Advance Auto Parts (
AAP Quick Quote AAP - Free Report) , Lithia Motors ( LAD Quick Quote LAD - Free Report) , and Costco Wholesale ( COST Quick Quote COST - Free Report) , all of which currently have a Zacks Rank of at least #2 and a VGM Score of at least B, making them well-rounded choices.
The Zacks Industry Rank is in the top 2% of all the industries we have in our universe, so it looks like there are some nice tailwinds for O'Reilly Automotive, even beyond its own solid fundamental situation.