Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.NEW YORK (TheStreet) -- O'Reilly Automotive (Nasdaq:ORLY) has been reiterated by TheStreet Ratings as a buy with a ratings score of A. The company's strengths can be seen in multiple areas, such as its impressive record of earnings per share growth, revenue growth, notable return on equity, expanding profit margins and increase in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow.
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- O'REILLY AUTOMOTIVE INC has improved earnings per share by 19.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, O'REILLY AUTOMOTIVE INC increased its bottom line by earning $4.75 versus $3.72 in the prior year. This year, the market expects an improvement in earnings ($5.75 versus $4.75).
- ORLY's revenue growth trails the industry average of 26.1%. Since the same quarter one year prior, revenues slightly increased by 3.6%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Current return on equity exceeded its ROE from the same quarter one year prior. This is a clear sign of strength within the company. Compared to other companies in the Specialty Retail industry and the overall market, O'REILLY AUTOMOTIVE INC's return on equity significantly exceeds that of both the industry average and the S&P 500.
- The gross profit margin for O'REILLY AUTOMOTIVE INC is rather high; currently it is at 53.20%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 9.73% is above that of the industry average.
- The stock price has risen over the past year, but, despite its earnings growth and some other positive factors, it has underperformed the S&P 500 so far. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
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