#7 - O’Reilly Automotive (NASDAQ:ORLY)
As the electric vehicle (EV) movement has stalled, it gives investors another chance to consider a stock split for O'Reilly Automotive Inc. (NASDAQ: ORLY). ORLY stock is up 42% in the last 12 months, which coincides with the company's revenue and earnings which continue to grow year-over-year.
The auto parts market is likely to be in a multi-year growth cycle as the average age of vehicles increases. Even if interest rates go down in 2024, it will take several months for consumers to pay down the debt they've taken on.
O'Reilly Automotive has conducted two stock splits with the most recent split occurring in 2005. Notably, the stock's trading volume is down 55% compared to its 20-year average. That would mean it could be a likely candidate to split its stock, which is trading above $1,300 per share.
About O'Reilly Automotive
O'Reilly Automotive, Inc, together with its subsidiaries, operates as a retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States, Puerto Rico, and Mexico. The company provides new and remanufactured automotive hard parts and maintenance items, such as alternators, batteries, brake system components, belts, chassis parts, driveline parts, engine parts, fuel pumps, hoses, starters, temperature control, water pumps, antifreeze, appearance products, engine additives, filters, fluids, lighting products, and oil and wiper blades; and accessories, including floor mats, seat covers, and truck accessories.
Read More - Current Price
- $1,219.11
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 15 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $1,269.31 (4.1% Upside)
Stock splits are generally thought to be a bullish indicator, but that perception is based on how investors feel about a stock. The facts make a different case. That's because a stock split doesn't fundamentally change the value of your shares or the company's intrinsic value.
And over time, there's no consensus about how stocks perform 6-9 months after a split. Some stocks have done well, and some have struggled.
In fact, there is some evidence that a higher percentage of companies whose stocks are going down before a stock split perform better after the split.
How you feel about a company's stock split will largely depend on how you felt about the company before the split. If your long-term thesis for owning the stock is still in place, and that the split is being issued to expand the investor pool, there's no reason to sell. On the other hand, if you believe that the split is based on some fundamental change in the business, it may be time to reassess the size of your position.
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