O'Reilly Automotive (ORLY) Stock Could Be 17.7% Undervalued After Buyback Expansion And Sales Growth

Simply Wall St.06-16

O'Reilly Automotive (ORLY) is back in focus after management expanded its share repurchase authorization by US$2.0b to US$31.75b and extended the program, alongside 8.1% Q1 2026 same-store sales ...

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See our latest analysis for O'Reilly Automotive. Despite the extended buyback and steady same store sales performance, O'Reilly Automotive's 1 year total shareholder return of 2.43% and 5 year total shareholder return of 147.51% contrast with more muted short term share price moves around the current US$90.26 level. If this kind of resilience interests you, it could be worth scanning for other retailers and suppliers with similar traits by using the 20 top founder-led companies With O'Reilly Automotive stock trading at US$90.26, showing steady multi year total returns and a long runway of buybacks already in place, the key question is whether investors are still getting a discount or if the market is already pricing in future growth. AdvertisementMost Popular Narrative: 17.7% Undervalued Against O'Reilly Automotive's last close at $90.26, the most followed narrative points to a fair value of $109.70, putting the current price at a clear discount in that framework.  O'Reilly's strategic emphasis on inventory and distribution capabilities, including a plan to increase average inventory per store by 5% in 2025, is intended to position the company to maintain high availability and service levels, which the narrative suggests could support revenue growth. The company is maintaining its strategy of sourcing diversification, reducing reliance on Chinese products to mitigate tariff impacts. Within this narrative, that approach is viewed as a way to help stabilize gross margins by decreasing potential cost pressures.  Read the complete narrative. Curious what sits behind that higher fair value for O'Reilly Automotive stock? The narrative focuses on assumptions about revenue trends, margins, and valuation multiples that together outline a specific path from today's price to that higher target. Result: Fair Value of $109.70 (UNDERVALUED) Have a read of the narrative in full and understand what's behind the forecasts. However, the O'Reilly Automotive narrative still faces pressure points, including potential tariff changes that could lift product costs and rising store level wages that could weigh on margins. Find out about the key risks to this O'Reilly Automotive narrative. Another View: O'Reilly Automotive Through the P/E Lens The analyst narrative frames O'Reilly Automotive as about 17.7% undervalued at $90.26 versus a fair value of $109.70, but the P/E ratio tells a different story. At 28.7x earnings, the stock sits above the US Specialty Retail industry on 21.1x and a peer average of 21.8x, and even above its own 19.8x fair ratio. That gap means investors today are paying a richer price than both sector peers and the level our fair ratio suggests the market could move toward over time. This raises the question: is this a quality premium you are comfortable paying, or valuation risk you would rather avoid? See what the numbers say about this price — find out in our valuation breakdown. NasdaqGS:ORLY P/E Ratio as at Jun 2026Next Steps If the mixed signals around O'Reilly Automotive leave you undecided, this is a good moment to review the full picture of risks and upsides and weigh the 3 key rewards and 2 important warning signs Looking for more investment ideas beyond O'Reilly Automotive? Do not stop with O'Reilly Automotive. Broaden your watchlist now so you are not looking back later wishing you had checked a few more ideas.  Target higher potential returns by scanning screener containing 20 high quality undiscovered gems that combine solid fundamentals with less crowded investor attention. Balance offense and defense by reviewing solid balance sheet and fundamentals stocks screener (48 results) that pair financial strength with room for future growth. Dial down portfolio stress by focusing on 68 resilient stocks with low risk scores that score well on resilience and business quality.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n        and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n        financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n        Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n        Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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