Strong Third-Quarter Sales, Profitability Lead Us to Reaffirm Outlook for O’Reilly; Shares Rich
We expect to raise our $236 fair value estimate by less than 5% to reflect narrow-moat O’Reilly’s solid third-quarter performance and the time value of money. Year to date, the firm has posted a 7.9% revenue increase and a 19.9% operating margin. While revenue growth has outpaced our 5.8% full-year target, O’Reilly’s operating margin is in line with our 19.8% 2016 estimate (on average, we expect 5.7% annual sales growth and a 21.3% operating margin over the next decade). Still, we see the shares...O'Reilly Automotive is a retailer of automotive aftermarket parts, tools, supplies, equipment and accessories, selling its products to both do-it-yourself and service provider customers. The company's stores carry a product line, including: new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting, oil and wiper blades; and accessories, such as floor mats, seat covers and truck accessories.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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