DCF Studio

    ORLY · NMS · Consumer Cyclical

    O'Reilly Automotive, Inc.

    Also onShortfallConsensus DriftCrosscheck

    Implied value per share

    USD 70.56

    Market price

    USD 90.70

    Implied upside

    -22.2%

    10-year forecast · Perpetuity growth terminal value · Mid-year discounting · Base case · Price 2026-11-02 · Accounts to 2025-12-31

    AdjustedCapital expenditure runs at 5.7% of revenue against depreciation of 2.7%. A perpetuity has to be a steady state, so the forecast tapers capex to maintenance at depreciation plus the reinvestment terminal growth requires (g/ROIC of NOPAT), and the terminal year carries on from there. The bridge is shown under Terminal Value.

    Current EV/EBITDA of 20.5x sits outside a defensible 3-20x band, so the exit multiple is capped at 20.0x. A multiple that far out usually means EBITDA is the wrong denominator for this business.

    Value Per Share

    Perpetuity growth
    USD 70.56-22.2%
    Exit multiple
    USD 93.53+3.1%
    Market price
    USD 90.70

    Same forecast, different terminal treatment. Percentages vs price.

    Forecast Cashflows

    Reporting currency (USD). Outflows negative.

    0bn2bn4bnFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35
    Nominal FCFFDiscounted to todayUSD
    LineFY26FY27FY28FY29FY30FY31FY32FY33FY34FY35CAGR
    RevenueUSD 19.3bnUSD 20.5bnUSD 21.7bnUSD 22.8bnUSD 23.9bnUSD 25.0bnUSD 26.0bnUSD 26.8bnUSD 27.6bnUSD 28.3bn+4.4%
    EBITUSD 3.8bnUSD 4.1bnUSD 4.3bnUSD 4.5bnUSD 4.8bnUSD 5.0bnUSD 5.2bnUSD 5.3bnUSD 5.5bnUSD 5.6bn+4.4%
    NOPATUSD 3.0bnUSD 3.2bnUSD 3.4bnUSD 3.6bnUSD 3.8bnUSD 3.9bnUSD 4.1bnUSD 4.2bnUSD 4.3bnUSD 4.5bn+4.4%
    Add depreciation & amortisationUSD 515.9mUSD 548.2mUSD 580.0mUSD 611.0mUSD 640.6mUSD 668.8mUSD 694.9mUSD 718.9mUSD 740.2mUSD 758.7m+4.4%
    Less capital expenditureUSD -1.1bnUSD -1.1bnUSD -1.1bnUSD -1.1bnUSD -1.1bnUSD -1.1bnUSD -1.0bnUSD -991.4mUSD -939.9mUSD -880.4m-2.5%
    Capex, % of revenue5.7%5.4%5.2%4.9%4.6%4.3%4.0%3.7%3.4%3.1%-
    Less increase in working capitalUSD 97.3mUSD 79.2mUSD 77.9mUSD 75.7mUSD 72.7mUSD 68.8mUSD 64.1mUSD 58.6mUSD 52.3mUSD 45.3m+8.1%
    Free cashflow to firmUSD 2.5bnUSD 2.7bnUSD 2.9bnUSD 3.2bnUSD 3.4bnUSD 3.6bnUSD 3.8bnUSD 4.0bnUSD 4.2bnUSD 4.4bn+6.3%
    Discount factor0.96460.89750.83510.77700.72290.67260.62580.58230.54180.5041-
    Present valueUSD 2.4bnUSD 2.4bnUSD 2.5bnUSD 2.5bnUSD 2.4bnUSD 2.4bnUSD 2.4bnUSD 2.3bnUSD 2.3bnUSD 2.2bn-
    Present Value Of The ForecastUSD 23.9bn

    Discount Rate

    Source shown per component. All overridable above.

    Risk-free rate4.89%US 10-year Treasury (^TNX), 2026-11-02
    Equity risk premium4.23%Damodaran, January 2026
    Beta0.701Reported 0.554, pulled toward 1.0 (Blume)
    Cost of equity7.86%Risk-free + beta x equity risk premium
    Cost of debt5.29%Risk-free + 40bp, the spread for a AAA rating at 14.7x interest cover. Book interest / average debt was lower, at 2.9%.
    Market capitalisationUSD 73.0bn89.6% of capital
    Total debtUSD 8.5bn10.4% of capital, book value as a proxy
    Tax rate21.0%Effective, capped at statutory
    WACC7.48%E/V x Re + D/V x Rd x (1 - t)

    Terminal Value

    Perpetuity growth is intrinsic. The exit multiple defaults to the company's current EV/EBITDA, so it answers a different question - what the shares are worth if today's rating holds and EBITDA grows as forecast.

    Perpetuity growth at 2.50%

    Value per shareUSD 70.56

    65% of EV

    Forecast FCFF, final year
    USD 4.4bn
    Capex at depreciation, working capital in reinvestment
    USD 4.5bn
    Less reinvestment at g/ROIC (4.2% of NOPAT)
    USD -187.7m
    Capitalised
    USD 4.3bn
    ROIC (reported)
    60.0%
    Terminal value, undiscounted
    USD 88.9bn
    Terminal value, discounted
    USD 44.8bn
    Enterprise value
    USD 68.7bn
    Less net debt
    USD 8.3bn
    Equity value
    USD 60.4bn

    Exit at 20.0x EBITDA

    Value per shareUSD 93.53

    73% of EV

    Terminal value, undiscounted
    USD 127.9bn
    Terminal value, discounted
    USD 64.5bn
    Enterprise value
    USD 88.3bn
    Less net debt
    USD 8.3bn
    Equity value
    USD 80.1bn

    Spread between methods: 28%.

    Sensitivity

    Value per share (USD) by discount rate and long-run growth.

    Long-run growth
    Discount rate1.50%2.00%2.50%3.00%3.50%
    5.48%100.14111.02125.60146.11177.04
    6.48%77.4483.5191.14101.00114.20
    7.48%62.3766.0970.5676.0782.98
    8.48%51.6654.0756.9060.2664.32
    9.48%43.6645.2947.1749.3551.91

    Outlined: this model. Green text: above today's price of 90.70. Shading: distance from this model's own value.

    Priced In

    What each input would have to be to justify the current price, one at a time.

    InputActualModelImplied
    Revenue growth, a year7.3%4.8%7.3%
    EBIT margin20.5%19.9%24.8%
    Discount rate-7.5%6.5%
    Download as Excel

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    Yahoo Finance and RBA data. General information, not advice. Methodology.