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What Do Analysts Think About O’Reilly Automotive, Inc.’s (NASDAQ:ORLY) Future?

Austin Wood

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On 31 December 2018, O’Reilly Automotive, Inc. (NASDAQ:ORLY) announced its earnings update. Overall, analysts seem cautiously bearish, as a 4.5% rise in profits is expected in the upcoming year, compared with the higher past 5-year average growth rate of 13%. With trailing-twelve-month net income at current levels of US$1.3b, we should see this rise to US$1.4b in 2020. Below is a brief commentary around O’Reilly Automotive’s earnings outlook going forward, which may give you a sense of market sentiment for the company. Investors wanting to learn more about other aspects of the company should research its fundamentals here.

View our latest analysis for O’Reilly Automotive

Can we expect O’Reilly Automotive to keep growing?

Longer term expectations from the 19 analysts covering ORLY’s stock is one of positive sentiment. Since forecasting becomes more difficult further into the future, broker analysts generally project out to around three years. To get an idea of the overall earnings growth trend for ORLY, I’ve plotted out each year’s earnings expectations and inserted a line of best fit to determine an annual rate of growth from the slope of this line.

NasdaqGS:ORLY Past and Future Earnings, February 24th 2019

By 2022, ORLY’s earnings should reach US$1.6b, from current levels of US$1.3b, resulting in an annual growth rate of 5.0%. This leads to an EPS of $22.2 in the final year of projections relative to the current EPS of $16.27. By the end of 2022, analysts are expecting earnings to outpace revenue, and margins to expand from the current 14% to 14%.

Next Steps:

Future outlook is only one aspect when you’re building an investment case for a stock. For O’Reilly Automotive, I’ve put together three essential factors you should further examine:

  1. Financial Health: Does it have a healthy balance sheet? Take a look at our free balance sheet analysis with six simple checks on key factors like leverage and risk.
  2. Valuation: What is O’Reilly Automotive worth today? Is the stock undervalued, even when its growth outlook is factored into its intrinsic value? The intrinsic value infographic in our free research report helps visualize whether O’Reilly Automotive is currently mispriced by the market.
  3. Other High-Growth Alternatives : Are there other high-growth stocks you could be holding instead of O’Reilly Automotive? Explore our interactive list of stocks with large growth potential to get an idea of what else is out there you may be missing!

We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.

If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.