O’Reilly Stock Cruising Higher With Steady Annual Growth

ORLY has jumped 40% since dropping to its recent lows

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O'Reilly Automotive, Inc. (NASDAQ:ORLY) is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. ORLY serves both professional service providers and do-it-yourself customers. O'Reilly operates 5,710 stores in 47 U.S. states and 22 stores in Mexico. ORLY is currently flat in electronic trading, steadily at $600.92.

O’Reilly stock has increased approximately 25% in price year-over-year and is up 42% since bottoming at a 52-week low of $424.03 at the end of January. Additionally, shares of ORLY have grown 32% year-to-date and are currently down just 3% from its record high of $621.73 that was tapped in July.

ORLY has steadily outperformed earnings expectations on all four of its most recent earnings reports. For Q3 of 2020, ORLY beat analysts’ estimates by a decent margin of $0.67, reporting an EPS of $7.07. For Q4 of 2020, O'Reilly's EPS decreased to $5.40, still beating expectations by a margin of $0.27. For Q1 of 2021, ORLY had an increase in earnings, rising to $7.06 per share and beating estimates by a huge margin of $1.59. For Q2 of 2021, O’Reilly reported an EPS of $8.33 and beat expectations by a wide margin of $0.77.

From a fundamental point of view, O’Reilly stock is an interesting long-term option for investors. The car parts company has maintained consistent growth on top- and bottom-lines for multiple years. ORLY's most notable fundamental issue is its balance sheet, which holds $5.91 billion in total debt and just $631.6 million in cash.

Nonetheless, a price-earnings ratio of 21.60 is a fair value considering O'Reilly's steady and substantial growth rate. ORLY also has a forward price-earnings ratio of 20.33, which indicates an expected growth in earnings for the company as well.

Short interest has been on the rise for ORLY, up 26% during the past two reporting periods. This accounts for 2.4% of the stocks' total available float, and would take just one day for shorts to buy back their bearish bets.

Now could be a good time to weigh in on ORLY with options, too. The stock is seeing attractively priced premiums at the moment, per the security's Schaeffer's Volatility Index (SVI) of 19%, which sits in the 10th percentile of its annual range. 

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