O’Reilly Auto Parts storefront with branded delivery truck, highlighting auto parts retail industry demand and growth. Key Points O'Reilly Automotive continues to successfully capture a larger share of the valuable professional automotive repair market. A growing fleet of older vehicles on the road provides a powerful and durable tailwind for future business growth. Wall Street experts continue to express strong confidence in the company's long-term performance and potential. Interested in O'Reilly Au ...

Company Overview - O'Reilly Automotive operates 6,447 stores in the U.S., selling aftermarket auto parts to both DIY and professional customers, positioning itself as a critical player in the automotive sector [2] - The company has demonstrated consistent performance, reporting a same-store sales increase of 4.7% in 2025, marking the 33rd consecutive year of positive comparable sales [3] Financial Performance - O'Reilly's revenue and net income have grown at compound annual rates of 8.3% and 10.8%, respectively, from 2015 to 2025, indicating strong financial health and growth potential [3] - Over the last three years, O'Reilly has spent $7.4 billion on stock buybacks, representing about 10% of its current market capitalization, which enhances earnings per share for existing shareholders [4] Market Position and Valuation - Despite a strong five-year performance with a 174% increase in share price, O'Reilly's stock has declined 19% over the last seven months, raising questions about its current valuation [1] - The current price-to-earnings (P/E) ratio stands at 29.5, which is lower than the all-time high of 38.6 but higher than the five-year average of 26.6, suggesting a potentially more attractive valuation for investors [6] - There is a belief that the stock remains on the expensive side, with a P/E multiple below 25 being more appealing for investment [7]

Core Viewpoint - O'Reilly Automotive has significantly outperformed the S&P 500 over the past five years, achieving a 215% return, indicating strong investment potential despite being in the aftermarket auto parts sector [1]. Financial Performance - O'Reilly's diluted earnings per share (EPS) have grown at a compound annual rate of 17.1% over the past decade, with no year showing a decline in profits [5]. - Analyst estimates predict a yearly EPS growth of 9.8% from 2025 to 2028, showcasing continued earnings strength [5]. Demand and Business Model - The company operates 6,585 stores, primarily in the U.S., and benefits from stable demand, making it recession-proof [6]. - O'Reilly sells essential auto parts such as brakes and batteries, which are critical for vehicle maintenance, ensuring consistent demand regardless of economic conditions [7]. Long-term Growth Factors - The aging vehicle fleet in the U.S. and increased driving mileage contribute to sustained demand for O'Reilly's products, leading to significant profits and free cash flow [8]. - The company has reduced its diluted outstanding share count by 6.5% over the past two years through stock buybacks, enhancing EPS for existing shareholders [8]. Valuation Perspective - O'Reilly's stock is perceived as having a high valuation, with a current price-to-earnings (P/E) ratio of 31.7, compared to 28.6 a decade ago, reflecting the market's preference for certainty [10]. - Despite the high P/E ratio, the stock price has increased by 436% over the past ten years, indicating strong investor confidence [10].

Core Insights - O'Reilly Automotive, Inc. (ORLY) is a leading retailer and supplier in the automotive aftermarket sector, with a market cap of $80.2 billion, serving both DIY customers and professional mechanics [1][2] Company Overview - ORLY operates over 6,000 stores across the U.S. and Mexico, known for its quality and reliability, which has fostered a loyal customer base [2] - The company is categorized as a large-cap stock, emphasizing its significant size and influence in the specialty retail industry [2] Stock Performance - ORLY's stock has seen a decline of 12.6% from its 52-week high of $108.72, reached on September 30, 2025, and has decreased by 4.8% over the past three months, underperforming the Dow Jones Industrials Average [3] - Year-to-date, ORLY shares have risen by 4.2%, outperforming the Dow Jones Industrials Average's 1.8% gain, but over the past 52 weeks, the stock has only climbed 3.8%, lagging behind the Dow's 11.6% returns [5] Financial Performance - In Q4, ORLY reported earnings per share (EPS) of $0.71, which fell short of Wall Street's expectation of $0.72, while revenue reached $4.41 billion, slightly exceeding forecasts of $4.40 billion [8] - The company projects full-year EPS between $3.10 and $3.20, with revenue expected to be in the range of $18.7 billion to $19 billion [8] Challenges - ORLY's recent underperformance is attributed to rising self-insurance and healthcare costs, along with cautious consumer behavior affecting the DIY segment, leading to increased selling, general, and administrative (SG&A) expenses [7]

Financial Performance - Total sales for the year ended December 31, 2025, reached $17,781,992, an increase from $16,708,479 in 2024, representing a year-over-year growth of approximately 6.4%[182] - Comparable store sales increased by 4.7% in 2025, following a 2.9% increase in 2024 and a 7.9% increase in 2023[182] - Gross profit for 2025 was $9,174,141, up from $8,554,489 in 2024, indicating a strong performance in profitability[182] - Net income for 2025 was $2,538,209, compared to $2,386,680 in 2024, reflecting a growth of approximately 6.4%[182] - Operating income for 2025 increased by 6% to $3.46 billion, maintaining 19.5% of sales, consistent with 2024[196] - Net income for 2025 rose to $2.54 billion, or 14.3% of sales, compared to $2.39 billion, also 14.3% of sales in 2024[199] - Diluted earnings per share increased by 10% to $2.97 on 856 million shares from $2.71 on 881 million shares in 2024[200] Store Operations - The total number of stores operated as of December 31, 2025, was 6,585, with 6,447 in the U.S., 112 in Mexico, and 26 in Canada[182] - The company anticipates net new store openings of 225 to 235 in 2026, following the opening of 207 and 198 new stores in 2025 and 2024, respectively[190] - The company opened 207 net new stores in 2025 and plans to open 225 to 235 net new stores in 2026, with estimated costs per store ranging from $3.2 million to $3.5 million[215] Expenses and Profitability - Selling, general and administrative expenses rose by 8% to $5.71 billion, accounting for 32.1% of sales, compared to $5.30 billion or 31.7% in 2024[195] - Total other expense for 2025 increased by 7% to $220 million, or 1.2% of sales, due to higher interest expenses[197] - The provision for income taxes for 2025 increased by 7% to $702 million, with an effective tax rate of 21.7%, up from $658 million and 21.6% in 2024[198] Cash Flow and Investments - Cash provided by operating activities for 2025 was $2,761,993, down from $3,049,576 in 2024[182] - Free cash flow for 2025 was $1,563,250 thousand, down from $1,987,808 thousand in 2024[211] - Net cash used in investing activities was $(1,152,356) thousand in 2025, a slight decrease from $(1,166,805) thousand in 2024, mainly due to the acquisition of Vast Auto in 2024[214] - The company expects to fund its capital requirements primarily through operating cash flows and borrowings under its unsecured revolving credit facility[202] Debt and Liquidity - The consolidated fixed charge coverage ratio was 6.08 times as of December 31, 2025, compared to 6.11 times in 2024, indicating strong liquidity[221] - The consolidated leverage ratio improved slightly to 1.92 times in 2025 from 1.89 times in 2024, reflecting effective debt management[221] - The company had no outstanding borrowings under its Revolving Credit Facility as of December 31, 2025, mitigating interest rate risk[232] - As of December 31, 2025, the company had outstanding borrowings under its commercial paper program amounting to $690.0 million, with a weighted-average variable interest rate of 3.979%[233] - The company reported outstanding fixed rate debt of $5.4 billion as of December 31, 2025, with a fair value estimated at $5.3 billion[234] Foreign Operations and Currency Exposure - Cash and cash equivalents held outside of the U.S. were $19.1 million as of December 31, 2025, up from $17.2 million in 2024, supporting liquidity needs in foreign operations[212] - The net asset exposure in Mexican subsidiaries was $507.8 million as of December 31, 2025, with a 15.7% strengthening of the Mexican peso against the U.S. dollar from December 31, 2024[237] - A potential loss in value of approximately $46.2 million could result from a 10% change in foreign currency exchange rates for the Mexican subsidiaries[237] - The net asset exposure in Canadian subsidiaries was $177.7 million as of December 31, 2025, with a 4.8% strengthening of the Canadian dollar against the U.S. dollar from December 31, 2024[238] - A potential loss in value of approximately $16.2 million could result from a 10% change in foreign currency exchange rates for the Canadian subsidiaries[238] Vehicle Market Trends - The average age of the U.S. vehicle population increased by 10.5% from 11.4 years in 2014 to 12.6 years in 2024, driving demand for aftermarket products[180] - The total number of registered vehicles in the U.S. increased by 13.4% from 2014 to 2024, reaching 286 million vehicles[179]

Market Overview - U.S. equity markets reached new all-time highs in Q4 2025, with the S&P 500 Index rising 2.66% and the Bloomberg U.S. Aggregate Bond Index increasing by 1.10% [1] - The Russell 1000 Growth Index saw healthcare, communication services, and financials as the top performing sectors, while utilities, real estate, and materials lagged [1] - The U.S. economy showed resilience, but consumer confidence deteriorated toward year-end, raising concerns about future spending and the labor market [1] - The Federal Reserve adopted a cautious approach due to mixed economic signals and uncertainty around data [1] - Artificial intelligence remained a significant theme in the market [1] Fund Performance - The Aristotle Core Equity Fund (Class I-2) returned 3.15% in Q4 2025, outperforming the S&P 500 Index's 2.66% return [1] - Both allocation effects and security selection contributed to the Fund's outperformance in the quarter [1] Company Focus: O'Reilly Automotive, Inc. - O'Reilly Automotive, Inc. (NASDAQ:ORLY) is a leading automotive parts retailer with a market capitalization of $77.092 billion [2] - As of February 26, 2026, O'Reilly's stock closed at $91.33 per share, with a one-month return of -7.19% and a 52-week loss of 0.27% [2] - O'Reilly Automotive detracted from performance in Q4 2025, despite exceeding consensus expectations in its third-quarter results [3] - Concerns arose regarding the weakening do-it-yourself (DIY) business, influenced by inflation driven by tariffs [3] - The professional business segment remains strong, and the company plans to increase the pace of new store openings in 2026 [3] Hedge Fund Interest - O'Reilly Automotive, Inc. was held by 69 hedge fund portfolios at the end of Q4 2025, down from 75 in the previous quarter [5] - While O'Reilly is acknowledged as a potential investment, certain AI stocks are believed to offer greater upside potential and carry less downside risk [5]

Core Insights - O'Reilly Automotive Inc. is recognized as one of the best consumer discretionary stocks to buy currently, despite a recent target price reduction by Morgan Stanley due to rising cost pressures [1][8]. Financial Performance - In Q4 2025, O'Reilly reported a 9.8% year-over-year increase in net income, reaching $605.2 million, up from $551.1 million [2]. - Earnings per diluted share increased by 12.7% year-over-year to $0.71, compared to $0.63 [2]. - Sales grew by 7.8% year-over-year to $4.4 billion, with same-store sales contributing 5.6% to this growth [3]. Cost and Margin Analysis - Operating profit margins experienced an 80-basis point year-over-year decline, from 18.8% to 18.0%, primarily due to increased costs [4]. - The cost of sales rose from 51.3% to 51.8% of sales, while selling, general, and administrative expenses increased from 33.0% to 33.3% [4]. Future Guidance - Management anticipates 225 to 235 net store additions and expects same-store sales growth of 3.0% to 5.0% for 2026, projecting revenue growth of approximately 5.2% to 6.9% [5]. - Full-year revenue is expected to be between $18.7 billion and $19.0 billion, with targeted gross profit margins of 51.5% to 52.0% and operating profit margins of 19.2% to 19.7% [5].

Core Viewpoint - O'Reilly Automotive, Inc. has seen mixed activity from institutional investors, with some increasing their stakes while others, like AMJ Financial Wealth Management, have reduced theirs. The company's stock performance and analyst ratings indicate a generally positive sentiment despite some recent earnings forecast revisions. Group 1: Institutional Holdings - AMJ Financial Wealth Management reduced its stake in O'Reilly Automotive by 4.4%, owning 118,023 shares valued at $12,724,000, making it the 5th largest position in their portfolio [2] - Coastline Trust Co increased its holdings by 4.0%, now owning 2,622 shares valued at $283,000 [3] - IAM Advisory LLC boosted its stake by 1.6%, owning 7,312 shares worth $788,000 [3] - Berkshire Asset Management LLC PA increased its position by 1.7%, now holding 7,260 shares valued at $783,000 [3] - Abound Wealth Management raised its stake by 9.6%, owning 1,375 shares valued at $148,000 [3] - EWA LLC increased its stake by 5.1%, now owning 2,559 shares valued at $276,000 [3] - 85.00% of O'Reilly Automotive's stock is currently owned by hedge funds and institutional investors [3] Group 2: Stock Performance and Financials - O'Reilly Automotive shares opened at $93.50, with a market cap of $78.92 billion, a P/E ratio of 31.55, and a 12-month low of $85.55 and high of $108.71 [4] - The company reported $4.41 billion in revenue for the last quarter, up 7.8% year-over-year, but missed earnings per share estimates at $0.71 [5] - O'Reilly Automotive has set its FY 2026 guidance at 3.100-3.200 EPS, with analysts forecasting 43.94 EPS for the current year [5] Group 3: Analyst Ratings - DA Davidson reaffirmed a "buy" rating with a $110.00 price target [6] - Wolfe Research upgraded the stock from "hold" to "strong-buy" [6] - Raymond James Financial upgraded the rating to "outperform" with a $105.00 target price [6] - Royal Bank Of Canada set a $109.00 price target and gave an "outperform" rating [6] - Consensus rating is "Moderate Buy" with a target price of $110.26 [6] Group 4: Insider Transactions - Senior Vice President Christopher Andrew Mancini sold 2,355 shares at an average price of $101.31, reducing his position by 98.83% [8] - Senior Vice President Philip M. Hopper sold 3,500 shares at an average price of $101.25, reducing his position by 42.21% [8] - Insiders own 1.01% of the company's stock [8] Group 5: Company Overview - O'Reilly Automotive is a leading retailer and distributor in the automotive aftermarket, supplying parts, tools, and accessories for both professional service providers and DIY customers [9] - The company operates a broad supply chain with regional distribution centers to support rapid replenishment of store inventory [10]

Company Overview - O'Reilly Automotive, Inc. (ORLY) is a leading automotive aftermarket retailer based in Springfield, Missouri, with a market valuation of approximately $78.3 billion, providing replacement parts, maintenance supplies, tools, equipment, and private-label products to professional repair shops and do-it-yourself customers [1] Stock Performance - Over the past 52 weeks, O'Reilly's shares have increased nearly 9%, slightly underperforming the S&P 500 Index, which gained 11.7% during the same period [1] - Year-to-date (YTD), O'Reilly's stock has risen 3.3%, outperforming the broader index's modest increase [1] - The State Street Consumer Discretionary Select Sector SPDR ETF (XLY) rose 2.8% over the last 52 weeks but fell 2.7% YTD, indicating O'Reilly's relative stability amid sector volatility [2] Q4 Fiscal 2025 Earnings - In Q4 fiscal 2025, O'Reilly reported a revenue increase of 7.8% year-over-year to $4.41 billion, aligning closely with the analyst estimate of $4.39 billion [5] - Earnings per share (EPS) for the quarter was $0.71, slightly below the $0.72 estimate, but represented a 12.7% growth from the previous year [5] Comparable Store Sales and Future Guidance - Comparable store sales increased by 5.6% in Q4, leading to a full-year 2025 comparable sales growth of 4.7%, reaching the high end of revised guidance [6] - For fiscal 2026, management has guided EPS to a range of $3.10 to $3.20, indicating a midpoint growth of 6.1% over 2025 [6] - The company plans to open 225 to 235 net new stores in 2026, including expansion into Canada [6] Analyst Ratings and Expectations - For the full fiscal year 2026, analysts expect diluted EPS to grow 8.1% year-over-year to $3.21 [7] - O'Reilly has consistently operated within a close range of expectations, beating EPS estimates in two of the past four quarters and missing in the other two [7] - Wall Street maintains an overall "Strong Buy" rating for ORLY stock, with 20 out of 28 analysts recommending "Strong Buy," three suggesting "Moderate Buy," and five calling for "Hold" [7][8]

Group 1 - The core idea of O'Reilly Automotive's stock split is to increase accessibility for investors by lowering the price per share while maintaining the same fundamental value of the company [1][2] - O'Reilly Automotive executed a 15-for-1 stock split in June last year, and its shares have appreciated significantly, up 58,000% since its IPO in 1993 [2][3] - The company operates nearly 6,600 stores primarily in the U.S., selling aftermarket auto parts, and has seen its stock price triple in the last five years [3][4] Group 2 - O'Reilly Automotive reported a same-store sales growth of 4.7% in 2025, marking the 33rd consecutive year of positive growth in this metric [4] - The demand for auto parts remains strong regardless of economic conditions, supported by an aging vehicle fleet and increased miles driven, which contributes to consistent revenue growth [5][6] - From 2015 to 2025, O'Reilly's revenue increased by 122%, and net income rose by 168%, aided by stock buybacks and new store openings [6] Group 3 - O'Reilly's current price-to-earnings (P/E) ratio is 31.8, which is 26% higher than the S&P 500 index, reflecting the company's quality and market positioning [7] - Value investors may be hesitant to invest unless the P/E ratio drops below 25, indicating a potential barrier for new investments at current valuations [7]