O'Reilly Automotive (ORLY) Is Water-Logged And Getting Wetter Today

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified O'Reilly Automotive ( ORLY) as a "water-logged and getting wetter" (weak stocks crossing below support with today's range greater than 200%) candidate. In addition to specific proprietary factors, Trade-Ideas identified O'Reilly Automotive as such a stock due to the following factors:

  • ORLY has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $66.8 million.
  • ORLY has traded 318,903 shares today.
  • ORLY traded in a range 206.3% of the normal price range with a price range of $2.91.
  • ORLY traded below its daily resistance level (quality: 95 days, meaning that the stock is crossing a resistance level set by the last 95 calendar days. The resistance price is defined by the Price - $0.01 at the time of the signal).

Stocks matching the 'Water-Logged and Getting Wetter' criteria are worthwhile stocks to watch for a variety of factors including historical back testing and volatility. Trade-Ideas targets these opportunities because the stock is exhibiting an unusual behavior while displaying negative price action. In this case, the stock crossed an important inflection point; namely, "support" while at the same time the range of the stock's movement in price is twice its normal size. This large range foreshadows a possible continuation as the stock moves lower.

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More details on ORLY:

O'Reilly Automotive, Inc., together with its subsidiaries, engages in the retail of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. ORLY has a PE ratio of 21.6. Currently there are 9 analysts that rate O'Reilly Automotive a buy, no analysts rate it a sell, and 7 rate it a hold.

The average volume for O'Reilly Automotive has been 703,600 shares per day over the past 30 days. O'Reilly Automotive has a market cap of $13.4 billion and is part of the services sector and retail industry. The stock has a beta of 0.25 and a short float of 4.4% with 9.13 days to cover. Shares are up 39.3% year-to-date as of the close of trading on Tuesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates O'Reilly Automotive as a buy. 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 solid stock price performance. We feel these strengths outweigh the fact that the company shows weak operating cash flow.

Highlights from the ratings report include:
  • O'REILLY AUTOMOTIVE INC has improved earnings per share by 28.0% 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 ($5.95 versus $4.75).
  • Despite its growing revenue, the company underperformed as compared with the industry average of 9.1%. Since the same quarter one year prior, revenues slightly increased by 7.9%. 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. When compared to other companies in the Specialty Retail industry and the overall market, O'REILLY AUTOMOTIVE INC's return on equity exceeds that of the industry average and significantly exceeds that of the S&P 500.
  • The gross profit margin for O'REILLY AUTOMOTIVE INC is rather high; currently it is at 53.62%. It has increased from the same quarter the previous year. Along with this, the net profit margin of 10.79% is above that of the industry average.
  • Powered by its strong earnings growth of 28.03% and other important driving factors, this stock has surged by 34.58% over the past year, outperforming the rise in the S&P 500 Index during the same period. Looking ahead, the stock's sharp 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 other strengths this company displays justify these higher price levels.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.
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