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ORLY STOCK WRITE UP


ORLY (O'REILLY AUTOMOTIVE PARTS)

  • P/E: 16.3
  • GAAP DILUTED YEAR-OVER-YEAR EPS GROWTH LAST QUARTER:
  • ASSETS-LIABILITIES: 2.06
  • SECTOR: RETAIL TRADE
  • DIVIDEND: none

ORLY is a chain of Auto Parts stores. The company's share price plunged almost 19% 7/5/17, after reporting a decline in its same-store sales numbers. A rapidly expanding company, ORLY has a disproportionate amount of debt on its balance sheet.
In the last quarter, O'Reilly increased sales by almost 3%, while operating income decreased by almost 4%. However, the company did post an increase in EPS on a year-over-year basis by virtue of decreased taxation. Autozone has only 1% of the amount of cash as it does long-term debt. The company also reports that it has roughly twice as much assets as it does liabilities, with the majority of these holdings in inventory and property. Cash decreased from 4Q '16 to 1Q '17, coinciding with the rise in inventory, and property.
O'Reilly trades at a 33% premium to its closest competitor, AZO. Both companies have fallen approximately 35% in share price since the beginning of the year. AZO posts higher revenues, while both companies have increased revenue over the past consecutive 4 years. ORLY's growth rate is nearly twice AZO's. ORLY missed both the expectations of Wall Street and itself in the last quarter.
Founded as a family business in 1957, O'Reilly came public in 1993, and several members of the O'Reilly family serve on the company board. The last major insider purchase was made by Daniel O'Reilly, the chairman, in August of 2016. Gregory Henslee is the company's CEO. He joined the company in 1984 as a store employee, and has been CEO since 2013. Henslee has declared that the specialist advice offered in O'Reilly stores trumps Amazon services, as people require assistance in selecting automotive parts.
The company is estimated to report in late July, and will look to reverse the trend of missing expectations with its sales figures, and revenue growth. While the company's sales have grown exponentially, so has its share price, and the expectations of Wall Street. The price-to-earnings multiple is still below the average S&P stock.

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