Dual-Market Strength Drives Strong Third Quarter for O’Reilly, but Shares Seem Expensive

We plan to lift our $600 per share valuation of narrow-moat O'Reilly by a mid-single-digit percentage after it posted strong third-quarter earnings (including 7.6% comparable growth) that leave it tracking above our full-year expectations. Our long-term forecast still assumes mid-single-digit percentage annual sales growth and low-20s adjusted operating margins. With the shares trading higher by a similar percentage after the news as our planned increase, we suggest investors await a more attractive entry point.