O'Reilly Automotive scores 73 for management and 55 for moat. The management score rests on a return on invested capital of 33.1% and a gross margin of 51.6% — figures that describe a business earning a respectable return on what it employs. Shareholder equity is negative, so the debt-to-equity figure is not meaningful here — usually the mark of heavy buybacks rather than distress, but worth checking. The moderate moat and strong management are not the same judgement, and the gap between them is where the argument about this business sits.
The price anchors are built on deliberately conservative assumptions. Growth is modelled at 8.9% a year, the rate measured from the filings. The exit multiple assumed is 17.8x. That produces an intrinsic value of $32.48, a 10-CAP price of $30.12 and a payback time price of $36.06, with the value zone set at the highest of the three, $36.06. Today's price of $85.03 is 136% above it.
The price is above the value zone and the business scores 55 for moat and 73 for management. Neither test argues for paying up here.
| Price | $85.03 |
| Market cap | $70.5B |
| P/E ratio | 27.1x |
| Return on invested capital | 33.1% |
| Gross margin | 51.6% |
| Debt to equity | -11.12x |
| Free cash flow yield | 2.1% |
| Growth rate used | 8.9% |
| Growth rate measured | 9.0% |
| Exit multiple assumed | 17.8x |
| Company | Moat | Buy price |
| MercadoLibre (MELI) | 94 | $3,945.46 |
| eBay (EBAY) | 47 | $56.69 |
| AutoZone (AZO) | 43 | $917.32 |
| PDD Holdings (PDD) | 85 | $178.95 |
Every number above is built on assumptions that can be changed. In Moatly you can move the growth rate, the exit multiple and the margin of safety and watch every figure recalculate, so you are testing your own view of O'Reilly Automotive rather than accepting ours.