Home / Business and Economy / O'Reilly Automotive Stock Soars, But Analysts Warn of Overvaluation
O'Reilly Automotive Stock Soars, But Analysts Warn of Overvaluation
5 Aug
Summary
- O'Reilly Automotive stock has been a terrific performer for years
- Stock's recent valuation metrics are well above historical averages
- Analysts advise caution, as the stock may be overheated with limited upside
As of July 2025, O'Reilly Automotive (NASDAQ: ORLY) stock has been a terrific performer, making many shareholders richer over the years. The company's average annual gains of 20% over the past decade would have turned a $10,000 investment into nearly $62,000. However, the stock's recent valuation metrics suggest it may be overheated and due for a pullback.
O'Reilly's forward-looking price-to-earnings (P/E) ratio of 33.4 is well above its five-year average of 23.2, and its price-to-sales ratio of 5.0 is also significantly higher than the historical average of 3.7. These elevated valuation levels indicate the stock may have gotten ahead of itself, with limited room for further gains.
Despite the company's solid second-quarter results, which saw revenue and earnings growth of 6% and 11%, respectively, the analyst team at The Motley Fool Stock Advisor has not included O'Reilly Automotive among their top 10 stock picks for the coming years. This suggests the stock may not be the best choice for investors at its current price levels.
While O'Reilly's business remains recession-resistant, as people will continue to need auto parts and supplies, the stock's valuation concerns may outweigh its growth potential in the near term. Investors interested in the company may want to add it to their watchlist and wait for a more attractive entry point before considering a purchase.
