O'Reilly Automotive Report


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Detailed report on O'Reilly Auto and the stock.

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O'Reilly Automotive Report

  1. 1. Investors Mosaic Fundamental Analysis © Investors’ Mosaic, Inc. www.investorsmosaic.com investorsmosaic.com
  2. 2. Auto Aftermarket Fundamentals Remain Strong Dueto Increasing of Age of Vehicle PopulationSource: O’Reilly Auto Parts Investor Day Presentation investorsmosaic.com
  3. 3. There is Room for the Industry Leaders to ContinueTaking Market Share from “Mom & Pops”Source: O’Reilly Auto Parts Investor Day Presentation investorsmosaic.com
  4. 4. The Industry is Large, But Growth is Only Moderate at1.0% - 2.0% a Year.Source: O’Reilly Auto Parts Investor Day Presentation investorsmosaic.com
  5. 5. O’Reilly’s Sales Performance Remains Rock Solid Dueto Favorable Macro Backdrop • The company benefits from a relatively even split of DIY and DIFM business. • The DIFM market is growing faster as fewer people have desire to work on their own cars. • But DIY is doing fine as the soft economy forces people to hold onto their vehicles longer and do more work themselves to save money. • Management is laser-like focused on enhancing productivity & providing superior customer service investorsmosaic.com
  6. 6. The Business Model is Scaling Beautifully With Roomfor Improvement as CSK Stores Mature investorsmosaic.com
  7. 7. Soft Real Estate Market and Labor Market is EnablingLower Store Rents and Keeping a Lid on Wages • The soft economy has helped O’Reilly improve their margin structure dramatically over the past few quarters. These tailwinds should persist for several more quarters. • Furthermore, O’Reilly has plenty of room to improve the performance of the CSK stores they purchased 3 years ago as they instill the O’Reilly culture. investorsmosaic.com
  8. 8. Favorable Balance Sheet Changes Accelerating FreeCash Flow and Improving Return on Capital • O’Reilly is taking a page from AutoZone’s playbook and focusing on squeezing cash out of the supplier base by leveraging their own strong credit profile. • Furthermore, management is very focused on removing excess inventory from the CSK stores. This has improved Inventory turns. • Overall, these changes generate cash and improve ROIC, both of which are very favorable for equity valuation. investorsmosaic.com
  9. 9. The Company is Starting to Generate Gobs of FreeCash Flow Which Will Go Towards Big Stock Buyback investorsmosaic.com
  10. 10. Financial Summary investorsmosaic.com
  11. 11. Our Valuation Analysis Suggests Fair Value is $94Based on 2012 EPS. investorsmosaic.com
  12. 12. We hope you found this report valuable. Our goal is to provide aresearch and collaboration platform for individuals in order todemystify investing and make it more approachable. We curateonly the best and most relevant information for fundamental stockanalysis. We filter out duplicative and non-valuable content so youcan focus on making more-informed and better investmentdecisions.Help us create the most thoughtful and collaborative communityby providing feedback on how we can improve our site. Thank You! investorsmosaic.com