O'Reilly Automotive: A Magnificent Stock-Split Stock to Buy in August

Investors have been enthusiastic about top-tier businesses announcing and completing stock splits in recent years. A stock split is a superficial change that doesn't affect a company's market cap or operating performance. While reverse splits are viewed negatively, forward splits are seen as positive. O'Reilly Automotive (ORLY) is a magnificent stock to buy in August after completing a 15-for-1 forward split, reducing its stock price from around $1,400 to $90. The company has gained almost 62,000% since its public debut and is a no-brainer buy for optimistic, long-term investors.

O'Reilly Automotive (ORLY) has completed a 15-for-1 forward stock split, reducing its share price from around $1,400 to $90. This move, while superficial, is a strategic decision aimed at increasing liquidity and attracting a broader range of investors. The forward split does not affect the company's market capitalization or operational performance.

O'Reilly Automotive has seen remarkable growth over the past five years, with its shares soaring 224% and crushing the broader market. The company's latest earnings report, released on July 28, 2025, indicated a 23% gain for the year. This performance is driven by solid growth in both professional and DIY segments, as well as a powerful industry tailwind. The average age of passenger vehicles in the U.S. has been increasing, leading to higher maintenance spending and supporting demand for O'Reilly's products [1].

The company's strong financial health is evident in its quarterly results. Revenue rose 5.9% year over year to $4.5 billion in the second quarter of 2025, with a 51.4% gross margin and a 20.2% operating margin. Free cash flow for the period was $449 million, allowing management to operate from a position of power [1].

O'Reilly Automotive's forward split is likely to attract more investors, particularly retail investors who may have been deterred by the high share price. This move aligns with the company's strategy to open new stores and expand its physical footprint. The company aims to open 200 to 210 net new stores in 2025, further bolstering its distribution and supply chain capabilities [1].

While the forward split is a positive move, investors should be cautious about the stock's valuation. O'Reilly Automotive is trading at a price-to-earnings (P/E) ratio of 34.8, a 35% premium to industry peer AutoZone. This makes the stock relatively expensive compared to historical levels and industry peers [1].

Institutional investors and analysts have shown strong interest in O'Reilly Automotive. Citigroup, for instance, has raised its price target to $114.00, amidst strong institutional interest. However, investors should consider waiting for a pullback before buying shares, given the stock's high valuation [2].

References:
[1] https://www.fool.com/investing/2025/07/31/oreilly-automotive-earnings-health-business/
[2] https://www.marketbeat.com/instant-alerts/insider-selling-oreilly-automotive-inc-nasdaqorly-svp-sells-29505-shares-of-stock-2025-07-31/