Let's talk about the popular O'Reilly Automotive, Inc. (NASDAQ:ORLY). The company's shares saw a decent share price growth of 13% on the NASDAQGS over the last few months. The company's trading levels have approached the yearly peak, following the recent bounce in the share price. With many analysts covering the large-cap stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, could the stock still be trading at a relatively cheap price? Today we will analyse the most recent data on O'Reilly Automotive's outlook and valuation to see if the opportunity still exists.
What's The Opportunity In O'Reilly Automotive?
The stock seems fairly valued at the moment according to our valuation model. It's trading around 10.20% above our intrinsic value, which means if you buy O'Reilly Automotive today, you'd be paying a relatively reasonable price for it. And if you believe that the stock is really worth $1132.48, there's only an insignificant downside when the price falls to its real value. In addition to this, O'Reilly Automotive has a low beta, which suggests its share price is less volatile than the wider market.
What kind of growth will O'Reilly Automotive generate?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. O'Reilly Automotive's earnings over the next few years are expected to increase by 20%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.
What This Means For You
Are you a shareholder? ORLY's optimistic future growth appears to have been factored into the current share price, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the financial strength of the company. Have these factors changed since the last time you looked at the stock? Will you have enough confidence to invest in the company should the price drop below its fair value?
Are you a potential investor? If you've been keeping tabs on ORLY, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the positive outlook is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop.
If you'd like to know more about O'Reilly Automotive as a business, it's important to be aware of any risks it's facing. When we did our research, we found 3 warning signs for O'Reilly Automotive (1 is a bit unpleasant!) that we believe deserve your full attention.
If you are no longer interested in O'Reilly Automotive, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
