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O'Reilly Automotive Inc ORLY

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O’Reilly’s Robust Second Quarter Despite Tough Comparisons Shows Its Strength, but Shares Seem Rich

Zain Akbari, CFA Equity Analyst

Analyst Note

| Zain Akbari, CFA |

Narrow-moat O’Reilly overcame difficult comparisons to post 10% comparable growth in 2021’s second quarter (on top of 16% expansion in the same period of 2020), consistent with our view that it and the sector should remain strong even as vaccination rates rise and conditions transition from the pandemic’s earlier stages. Our long-term targets still call for mid-single-digit top-line growth and roughly 20% adjusted operating margins on average. We continue to see O’Reilly as the best in its class, but suggest investors await a more attractive entry point.

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Company Profile

Business Description

O’Reilly is one of the largest sellers of aftermarket automotive parts, tools, and accessories, serving professional and DIY customers (41% and 59% of 2020 sales, respectively). The company sells branded as well as own-label products, with the latter category comprising nearly half of sales. O’Reilly had 5,616 stores as of the end of 2020, spread across 47 U.S. states and including 22 stores in Mexico. The firm serves professional and DIY customers through its store network, and also boasts approximately 765 sales personnel targeting commercial buyers.

233 South Patterson Avenue
Springfield, MO, 65802
T +1 417 862-6708
Sector Consumer Cyclical
Industry Specialty Retail
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type Cyclical
Employees 77,827