For long term investors, improvement in profitability and outperformance against the industry can be important characteristics in a stock. In this article, I will take a look at O’Reilly Automotive Inc’s (NASDAQ:ORLY) track record on a high level, to give you some insight into how the company has been performing against its historical trend and its industry peers.
View out our latest analysis for O’Reilly Automotive
Were ORLY’s earnings stronger than its past performances and the industry?
ORLY’s trailing twelve-month earnings (from 31 March 2018) of US$1.17b has
jumped 12.08% compared to the previous year.
However, this one-year growth rate has been lower than its average earnings growth rate over the past 5 years of 13.39%, indicating the rate at which ORLY is growing has slowed down.
To understand what’s happening,
let’s look at what’s
with margins and
is facing the same headwind.
couple of years,
revenue growth has
not been able to catch up,
O’Reilly Automotive’s bottom line has been
growth from a sector-level, the
specialty retail industry has been
growing, albeit, at a
single-digit rate of 6.68%
and 5.88% over the
This suggests that
the industry is
O’Reilly Automotive is
able to amplify
this to its advantage.
In terms of returns from investment, O’Reilly Automotive has
invested its equity funds well leading to a 276.95% return on equity (ROE), above the sensible minimum of 20%.
Furthermore, its return on assets (ROA) of 16.59% exceeds the US Specialty Retail industry of 7.16%, indicating O’Reilly Automotive has used its assets more efficiently.
And finally, its return on capital (ROC), which also accounts for O’Reilly Automotive’s debt level, has increased over the past 3 years from 33.54% to 41.97%.
What does this mean?
O’Reilly Automotive’s track record can be a valuable insight into its earnings performance, but it certainly doesn’t tell the whole story.
Positive growth and profitability are what investors like to see in a company’s track record, but how do we properly assess sustainability?
I recommend you
continue to research O’Reilly Automotive to get a
of the stock by looking at:
- Future Outlook: What are well-informed industry analysts predicting for ORLY’s future growth? Take a look at our free research report of analyst consensus for ORLY’s outlook.
- Financial Health: Is ORLY’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
- Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 March 2018. This may not be consistent with full year annual report figures.
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