Shareholders might have noticed that O'Reilly Automotive, Inc. (NASDAQ:ORLY) filed its quarterly result this time last week. The early response was not positive, with shares down 4.3% to US$1,054 in the past week. It was a credible result overall, with revenues of US$4.0b and statutory earnings per share of US$9.20 both in line with analyst estimates, showing that O'Reilly Automotive is executing in line with expectations. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.
Following the latest results, O'Reilly Automotive's 26 analysts are now forecasting revenues of US$16.9b in 2024. This would be an okay 5.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to increase 5.2% to US$42.38. In the lead-up to this report, the analysts had been modelling revenues of US$16.9b and earnings per share (EPS) of US$42.41 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
The analysts reconfirmed their price target of US$1,144, showing that the business is executing well and in line with expectations. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on O'Reilly Automotive, with the most bullish analyst valuing it at US$1,275 and the most bearish at US$780 per share. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that O'Reilly Automotive's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 7.2% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.9% per year. So it's pretty clear that, while O'Reilly Automotive's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.
The Bottom Line
The most obvious conclusion is that there's been no major change in the business' prospects in recent times, with the analysts holding their earnings forecasts steady, in line with previous estimates. Fortunately, they also reconfirmed their revenue numbers, suggesting that it's tracking in line with expectations. Additionally, our data suggests that revenue is expected to grow faster than the wider industry. The consensus price target held steady at US$1,144, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on O'Reilly Automotive. Long-term earnings power is much more important than next year's profits. We have forecasts for O'Reilly Automotive going out to 2026, and you can see them free on our platform here.
Plus, you should also learn about the 3 warning signs we've spotted with O'Reilly Automotive (including 1 which can't be ignored) .
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