O’Reilly Automotive (ORLY -0.35%) operates a reasonably boring enterprise promoting auto elements to shoppers and business clients. And but a $10,000 funding within the retailer on the flip of the century would now be price over $1.2 million. Might placing $10k into the inventory immediately make you a millionaire?
What does O’Reilly Automotive do?
At its core, O’Reilly Automotive is a retailer. The auto elements it sells place the corporate into the commercial sector, however the way in which a retailer grows is mainly the identical as it could be in another sector. It may promote extra from every of its shops or it may open extra shops — or each. That is actually the fundamental math of development within the retail area of interest.
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New shops are way more impactful to top-line development than promoting extra from current shops. That is how O’Reilly has grown a lot over time. To place some numbers on that, it operated 6,416 shops on the finish of the primary quarter of 2025. Roughly a decade in the past, it operated 4,433 areas. Mainly, it expanded its retailer footprint by roughly 45% in 10 years. That is a variety of development in a reasonably brief time.
That is to not counsel that O’Reilly is not working its shops very effectively. It could not have stored rising like that for thus lengthy if it weren’t. Notably, within the first quarter of 2025, same-store gross sales elevated a stable 3.6%. Mainly, O’Reilly is executing effectively on the 2 most essential development drivers it has at its disposal. And that’s the way it has made millionaires out of early buyers.
Future development might be more durable to come back by
The issue that new buyers need to grapple with is that O’Reilly is a a lot bigger firm immediately than it was a decade in the past, not to mention on the flip of the century. That makes it more durable to continue to grow. Sooner or later, it can have saturated the market alternative it has.
However administration does not consider it is at that time but, noting that it has plans to open as many as 210 new shops in 2025. So long as it may preserve profitably opening up new areas, the corporate’s development will probably proceed.
That stated, there are different points to think about immediately. For starters, the corporate is coping with rising working bills. That led to a year-over-year drop in web revenue within the first quarter of 2025. Earnings per share rose, however solely due to a big share buyback program. Coping with points like rising working prices will get harder as an organization will get bigger as a result of there are extra shifting elements to take care of.
So O’Reilly is effectively run, however a extra advanced enterprise and its huge retailer rely are two points that will make it a much less rewarding funding sooner or later than it was prior to now. Then there’s the problem of valuation. The inventory’s price-to-sales and price-to-earnings ratios are each effectively above their five-year averages, suggesting it’s costly proper now.
That stated, the inventory has skilled a number of 20%-plus drawdowns since 2000. Such a decline immediately would make the inventory rather more engaging, valuation smart. And shopping for after such a fabric value drop would enhance the probabilities of it turning a brand new investor right into a millionaire.
Might O’Reilly make you a millionaire?
If O’Reilly can continue to grow its enterprise prefer it has been for years, it might very effectively assist create a couple of extra millionaires alongside the way in which. However given its bigger measurement and elevated complexity as a enterprise, it could possibly be more durable to repeat that feat from right here. Which is why valuation is more likely to be so essential.
In the event you purchase O’Reilly when it’s costly, because it appears immediately, you materially diminish the probabilities that it’ll energy your portfolio into the seven-figure house. Given the frequent massive drawdowns within the inventory, affected person buyers are most likely higher off ready on the shares for now.
