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Here's What Analysts Are Forecasting For O'Reilly Automotive, Inc. After Its Yearly Results

Simply Wall St
·4 mins read

Last week, you might have seen that O'Reilly Automotive, Inc. (NASDAQ:ORLY) released its yearly result to the market. The early response was not positive, with shares down 4.5% to US$388 in the past week. O'Reilly Automotive reported in line with analyst predictions, delivering revenues of US$10b and statutory earnings per share of US$17.88, suggesting the business is executing well and in line with its plan. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We thought readers would find it interesting to see analysts' latest (statutory) post-earnings forecasts for next year.

Check out our latest analysis for O'Reilly Automotive

NasdaqGS:ORLY Past and Future Earnings, February 10th 2020
NasdaqGS:ORLY Past and Future Earnings, February 10th 2020

Taking into account the latest results, the most recent consensus for O'Reilly Automotive from 19 analysts is for revenues of US$10.8b in 2020, which is a satisfactory 6.3% increase on its sales over the past 12 months. Statutory earnings per share are expected to accumulate 7.5% to US$19.43. In the lead-up to this report, analysts had been modelling revenues of US$10.7b and earnings per share (EPS) of US$19.86 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.

It might be a surprise to learn that the consensus price target was broadly unchanged at US$441, with analysts clearly implying that the forecast decline in earnings is not expected to have much of an impact on valuation. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic O'Reilly Automotive analyst has a price target of US$483 per share, while the most pessimistic values it at US$350. This shows there is still quite a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. Next year brings more of the same, according to analysts, with revenue forecast to grow 6.3%, in line with its 6.3% annual growth over the past five years. Juxtapose this against our data, which suggests that other companies (with analyst coverage) in the are forecast to see their revenues grow 5.7% per year. So although O'Reilly Automotive is expected to maintain its revenue growth rate, it's only growing at about the rate of the wider market.

The Bottom Line

The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for O'Reilly Automotive. Happily, there were no real changes to sales forecasts, with the business still expected to grow in line with the overall market. The consensus price target held steady at US$441, with the latest estimates not enough to have an impact on analysts' estimated valuations.

Still, the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple O'Reilly Automotive analysts - going out to 2022, and you can see them free on our platform here.

You can also see whether O'Reilly Automotive is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.

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.

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. Thank you for reading.