Is O'Reilly Automotive, Inc. (ORLY) Fairly Valued?
O'Reilly Automotive, Inc. valuation review using P/E, fair value, revenue growth, EPS growth, net margin, and TGMCharts chart exhibits as of July 10, 2026.
By TGMCharts Research · Data as of · Updated
O'Reilly Automotive, Inc.'s core operational metrics must be weighed against its current pricing to determine if its market position is sustainable. The company's equity currently commands a trailing earnings multiple of 28.20x while its independent analyst DCF (FMP) benchmark is established at $100.
Evaluating the stock's premium requires analyzing its long-term operational performance. Over the past five years, the firm has achieved a compounded annual revenue growth rate of 8.30% and a compounded annual earnings per share expansion of 13.49%. This financial momentum is paired with a net profit margin of 14.30%, which serves as the primary gauge of whether current market pricing remains structurally supported.
- O'Reilly Automotive, Inc. closed at $87.28 on July 10, 2026.
- Trailing P/E is 28.20x and price-to-sales is 3.99x.
- Analyst DCF (FMP) is $100 with margin of safety at 15.94%.
- Five-year revenue CAGR is 8.30% and five-year EPS CAGR is 13.49%.
- Earnings yield is 3.55% and net margin is 14.30%.
Valuation Setup
The market price, model anchor, growth support, and profitability facts behind the valuation read.
Assessing the Operational Support Behind a Premium Multiple
Evaluating the investment profile of O'Reilly Automotive, Inc. requires a rigorous examination of whether its underlying financial performance justifies its current market valuation. As of July 10, 2026, the stock concluded trading at $87.28, representing a trailing price-to-earnings multiple of 28.20x. This market price reflects a discount relative to the third-party analyst DCF (FMP) reference price of $100, which yields an implied margin of safety of 15.94%. This fair value benchmark is an external analytical input and does not represent a proprietary valuation model from this publication.
A comprehensive fundamental assessment must look beyond any single valuation ratio to understand the interplay between price, earnings, top-line expansion, and margin durability. By analyzing the trailing earnings multiple alongside the price-to-sales ratio, earnings yield, and historical growth rates, we can determine whether the current market pricing is supported by robust operational expansion or if it is heavily reliant on multiple expansion and optimistic investor sentiment.
Deconstructing Current Market Multiples and Owner Yields
To establish what investors are currently paying for the business, we examine the primary market multiples. The equity currently carries a price-to-sales ratio of 3.99x, reflecting the premium commanded by its revenue stream. Concurrently, the company's earnings yield stands at 3.55%, which represents the inverse of the price-to-earnings ratio and provides a direct look at the yield generated for equity holders at current price levels. This yield must be evaluated against the broader cost of capital to determine if the equity risk premium remains attractive.
ORLY P/E ratio Chart
The trailing earnings multiple is the main valuation exhibit because it connects the market price to reported earnings.
Latest P/E ratio: 28.20x as of July 10, 2026.
A P/E ratio of 28.20x has to be judged against the company's five-year EPS CAGR of 13.49%. If the multiple is high while EPS support is ordinary, the valuation thesis becomes more dependent on investor confidence than on fresh earnings power.
ORLY price-to-sales Chart
Price-to-sales gives a second valuation lens when margins and earnings can move around the cycle.
Latest price-to-sales ratio: 3.99x.
Price-to-sales at 3.99x is most useful beside net margin of 14.30%. A richer sales multiple is easier to defend when margin quality is durable rather than temporarily elevated.
Comparing Current Market Price to Independent DCF Benchmarks
The independent analyst DCF (FMP) model establishes a reference value of $100 for the stock. With the market price sitting at $87.28, the equity trades at a positive margin of safety of 15.94% relative to this specific third-party projection. While this relationship suggests that the current market price is below the estimated present value of future cash flows, this benchmark should be treated as a single data point within a broader mosaic. Investors should consult a variety of scenario analyses, as actual cash flow trajectories can deviate significantly from static model assumptions.
The valuation at a glance
Each input on its own line: what the stock costs against earnings and sales, the model's fair value and how far price sits from it, and the growth and margins behind the business.
ORLY earnings yield Chart
Earnings yield reframes valuation from an owner's-yield perspective rather than a multiple perspective.
Latest earnings yield: 3.55%.
The earnings yield of 3.55% is the counterweight to the P/E ratio. If the yield is thin relative to the quality and growth profile, the valuation case needs more help from future compounding.
Analyzing Five-Year Top-Line and Per-Share Growth Trajectories
Long-term compounding is the critical engine that supports elevated valuation multiples. Over the past five years, the company has expanded its top-line revenue at a compounded annual rate of 8.30%. This steady top-line growth has been successfully translated into more rapid bottom-line expansion, with the five-year compounded annual earnings per share growth rate reaching 13.49%. This divergence highlights the historical efficiency of the company's operational model and share repurchase programs, which have allowed earnings per share to outpace absolute revenue growth.
ORLY revenue
Revenue history tests whether the valuation is being supported by real business expansion.
Five-year revenue CAGR: 8.30%. This is endpoint-to-endpoint from the fiscal years shown — a depressed start year can inflate it, so read it against the recent bars.
Revenue growth is the business-expansion evidence behind the valuation read. A five-year revenue CAGR of 8.30% helps show how much of the valuation story is coming from company growth instead of only multiple expansion.
ORLY EPS
EPS history checks whether reported earnings are keeping pace with the market multiple.
Five-year EPS CAGR: 13.49%. This is endpoint-to-endpoint from the fiscal years shown — a depressed or negative start year can inflate it, so read it against the recent bars.
A five-year EPS CAGR of 13.49% is the clearest support figure for a P/E-based conclusion. If EPS growth slows while the multiple remains elevated, the article should become more cautious after refresh.
Evaluating Profitability Durability Against Sales Valuations
The strength of a company's profit margins determines how effectively top-line sales are converted into shareholder value. The firm currently operates with a net profit margin of 14.30%. When analyzed alongside the price-to-sales ratio of 3.99x, this profit margin helps clarify whether the market is paying an appropriate price for each dollar of sales. A high sales multiple is far more defensible when backed by stable or expanding profit margins, whereas any structural pressure on margins would quickly make the current sales multiple look demanding.
ORLY net margin
Net margin shows whether the company has enough profitability quality to support its valuation.
Net margin (TTM): 14.30%. The bars below are annual fiscal years.
Net margin of 14.30% is a quality signal, not a valuation verdict by itself. It matters because a premium multiple is more defensible when margins are structurally strong and less defensible when margins are peaking.
The Core Tension Between Growth Momentum and Multiple Compression
The primary argument for the current valuation is the consistent operational execution of the business, characterized by a five-year revenue CAGR of 8.30%, an EPS CAGR of 13.49%, and a solid net margin of 14.30%. Conversely, the primary risk to the valuation is that the trailing earnings multiple of 28.20x leaves very little room for operational missteps. If top-line growth moderates or if capital expenditures pressure cash generation, the stock could face downward pressure, especially given that free cash flow growth has recently trended downward.
Bull and bear case
Valuation support
- Five-year revenue CAGR of 8.30% and five-year EPS CAGR of 13.49% support the business case.
- Net margin of 14.30% is the quality check behind the multiple.
Valuation pressure
- A P/E ratio of 28.20x can become demanding if EPS growth slows.
- The analyst-DCF (FMP) margin of safety at 15.94% should change the valuation read if it deteriorates after refresh.
Key Operational Signposts That Would Alter the Valuation Read
Several key fundamental shifts would require a reassessment of this valuation analysis. A significant narrowing of the margin of safety—either through an upward movement in the stock price or a downward revision of the analyst DCF (FMP) reference below $100—would alter the risk-reward profile. Additionally, any deterioration in the five-year EPS growth trend of 13.49% or a contraction in the net margin below 14.30% would signal that the business is no longer generating the high-quality earnings required to support its current pricing structure.
A Balanced Perspective on Operational Support and Market Pricing
In conclusion, the valuation of O'Reilly Automotive, Inc. represents a balance between strong historical execution and high market expectations. While the positive margin of safety of 15.94% relative to the analyst DCF (FMP) reference of $100 is encouraging, the sustainability of the current multiple ultimately depends on the company's ability to maintain its five-year revenue growth of 8.30% and its net margin of 14.30%. This analysis relies entirely on verified financial data and does not constitute personalized investment advice or a directional recommendation.
FAQ
Is ORLY fairly valued?
O'Reilly Automotive, Inc. trades at 28.20x trailing earnings with an analyst-DCF (FMP) margin of safety of 15.94%. The cleanest read comes from comparing that valuation to five-year revenue CAGR of 8.30% and five-year EPS CAGR of 13.49%.
What valuation metric matters most for ORLY?
This article anchors on P/E, fair value, margin of safety, price-to-sales, earnings yield, revenue growth, and EPS growth. No single metric is treated as a recommendation.
How often should this ORLY valuation view refresh?
We refresh this note after each daily market close, so the price, fair value, and every figure stay current. Numbers here are as of July 10, 2026.
What would change our mind
- A material move away from the analyst-DCF (FMP) reference of $100.
- A break in five-year EPS support, currently 13.49%.
- Margin quality drifting away from the latest net margin of 14.30%.
The bottom line
O'Reilly Automotive, Inc. valuation research note from TGMCharts Research, grounded in precomputed fundamentals, chart exhibits, and a frozen claim ledger.
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Data snapshot · By TGMCharts Research.
Every number in this note comes from data we compute and store ourselves from the company's reported figures, plus verbatim excerpts from its SEC filings. When a value isn't available we say so — we never fill gaps with estimates.
Latest filing excerpt
10-Q · filed 2026-05-08 · period 2026-03-31 · SEC EDGAR source
- “Currently, our consolidated revenue is primarily generated within the United States.”
- “The increase in total SG&A dollars for the three months ended March 31, 2026, was primarily the result of additional Team Members and operating expenses to support our increased sales and store count.”
- “The increase in total other expense for the three months ended March 31, 2026, was the result of increased interest expense on higher average outstanding borrowings.”
- “However, there can be no assurance that we will continue to generate cash flows or maintain liquidity at or above recent levels, as we are unable to predict decreased demand for our products or changes in customer buying patterns.”
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Every numeric or dated claim in this note was checked against our stored company data before publishing — each figure below links to the page it comes from.