O’Reilly Automotive Earnings: Robust Growth in Pro and DIY Underpin Solid Quarter, but Shares Pricey

We plan to raise our $870 fair value estimate on wide-moat O’Reilly by a low- to- mid-single-digit percentage after the firm delivered strong fourth-quarter marks. Results featured a 4.4% increase in comparable sales, outpacing our 3% forecast and the 3.9% uptick in motor vehicle parts and accessories expenditures in the fourth quarter, per the Bureau of Economic Analysis. Encouragingly, the firm delivered a healthy combination of mid-single-digit comp growth in the professional channel and a 3% gain in sales to do-it-yourself customers. Regarding profitability, operating margin of 18.9% increased about 10 basis points from the prior year when adjusting for a self-insurance reserve charge, closely aligning with our 19% estimate.