O'Reilly Automotive Report
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The document summarizes key points from an O'Reilly Auto Parts investor presentation. It notes that the aging vehicle population is supporting ongoing strong fundamentals in the auto aftermarket industry. It also discusses O'Reilly's business model, including their mix of DIY and professional customers, focus on productivity and customer service, and opportunities to improve performance at acquired CSK stores. Additionally, it covers how favorable economic conditions are helping O'Reilly improve margins through lower rents and wages while reducing inventory.
O'Reilly Automotive Report
- 1. Investors Mosaic Fundamental Analysis 息 Investors Mosaic, Inc. www.investorsmosaic.com investorsmosaic.com
- 2. Auto Aftermarket Fundamentals Remain Strong Due to Increasing of Age of Vehicle Population Source: OReilly Auto Parts Investor Day Presentation investorsmosaic.com
- 3. There is Room for the Industry Leaders to Continue Taking Market Share from Mom & Pops Source: OReilly Auto Parts Investor Day Presentation investorsmosaic.com
- 4. The Industry is Large, But Growth is Only Moderate at 1.0% - 2.0% a Year. Source: OReilly Auto Parts Investor Day Presentation investorsmosaic.com
- 5. OReillys Sales Performance Remains Rock Solid Due to 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. The Business Model is Scaling Beautifully With Room for Improvement as CSK Stores Mature investorsmosaic.com
- 7. Soft Real Estate Market and Labor Market is Enabling Lower Store Rents and Keeping a Lid on Wages The soft economy has helped OReilly improve their margin structure dramatically over the past few quarters. These tailwinds should persist for several more quarters. Furthermore, OReilly has plenty of room to improve the performance of the CSK stores they purchased 3 years ago as they instill the OReilly culture. investorsmosaic.com
- 8. Favorable Balance Sheet Changes Accelerating Free Cash Flow and Improving Return on Capital OReilly is taking a page from AutoZones 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. The Company is Starting to Generate Gobs of Free Cash Flow Which Will Go Towards Big Stock Buyback investorsmosaic.com
- 10. Financial Summary investorsmosaic.com
- 11. Our Valuation Analysis Suggests Fair Value is $94 Based on 2012 EPS. investorsmosaic.com
- 12. We hope you found this report valuable. Our goal is to provide a research and collaboration platform for individuals in order to demystify investing and make it more approachable. We curate only the best and most relevant information for fundamental stock analysis. We filter out duplicative and non-valuable content so you can focus on making more-informed and better investment decisions. Help us create the most thoughtful and collaborative community by providing feedback on how we can improve our site. Thank You! investorsmosaic.com