Critical Analysis: O'Reilly Automotive (ORLY) vs. Tapestry (TPR)

O'Reilly Automotive (NASDAQ: ORLY) and Tapestry (NYSE:TPR) are both large-cap retail/wholesale companies, but which is the superior business? We will compare the two companies based on the strength of their analyst recommendations, valuation, dividends, institutional ownership, profitability, earnings and risk.

Profitability

This table compares O'Reilly Automotive and Tapestry’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
O'Reilly Automotive 12.63% 119.05% 14.31%
Tapestry 6.14% 23.68% 10.98%

Dividends

Tapestry pays an annual dividend of $1.35 per share and has a dividend yield of 2.6%. O'Reilly Automotive does not pay a dividend. Tapestry pays out 120.5% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future.

Valuation & Earnings

This table compares O'Reilly Automotive and Tapestry’s gross revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio Net Income Earnings Per Share Price/Earnings Ratio
O'Reilly Automotive $8.98 billion 2.23 $1.13 billion $12.67 18.90
Tapestry $4.49 billion 3.28 $591.00 million $1.12 46.20

O'Reilly Automotive has higher revenue and earnings than Tapestry. O'Reilly Automotive is trading at a lower price-to-earnings ratio than Tapestry, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

88.6% of O'Reilly Automotive shares are owned by institutional investors. Comparatively, 89.4% of Tapestry shares are owned by institutional investors. 3.1% of O'Reilly Automotive shares are owned by insiders. Comparatively, 1.0% of Tapestry shares are owned by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Analyst Recommendations

This is a breakdown of current ratings and recommmendations for O'Reilly Automotive and Tapestry, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
O'Reilly Automotive 0 9 10 1 2.60
Tapestry 1 6 21 1 2.76

O'Reilly Automotive currently has a consensus target price of $250.50, indicating a potential upside of 4.62%. Tapestry has a consensus target price of $52.06, indicating a potential upside of 0.63%. Given O'Reilly Automotive’s higher probable upside, research analysts clearly believe O'Reilly Automotive is more favorable than Tapestry.

Risk & Volatility

O'Reilly Automotive has a beta of 0.95, meaning that its share price is 5% less volatile than the S&P 500. Comparatively, Tapestry has a beta of 0.48, meaning that its share price is 52% less volatile than the S&P 500.

Summary

O'Reilly Automotive beats Tapestry on 10 of the 16 factors compared between the two stocks.

O'Reilly Automotive Company Profile

O’Reilly Automotive, Inc. is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States. The Company sells its products to both do-it-yourself (DIY) and professional service provider customers. The Company’s product line includes new and remanufactured automotive hard parts, such as alternators, starters, fuel pumps, water pumps, brake system components, batteries, belts, hoses, temperature control, chassis parts, driveline parts and engine parts; maintenance items, such as oil, antifreeze, fluids, filters, wiper blades, lighting, engine additives and appearance products, and accessories, such as floor mats, seat covers and truck accessories. The Company’s stores offer various services and programs to its customers, such as used oil, oil filter and battery recycling; battery diagnostic testing; electrical and module testing; check engine light code extraction; loaner tool program; custom hydraulic hoses, and machine shops.

Tapestry Company Profile

Tapestry, Inc., formerly Coach, Inc., is a design house of luxury accessories and lifestyle collections. The Company’s product offering uses a range of leathers, fabrics and materials. The Company‚Äôs brands include Coach, Kate Spade, and Stuart Weitzman. Its segments include North America, International and Stuart Weitzman. The North America segment includes sales of Tapestry brand products to North American customers through Tapestry-operated stores (including the Internet) and sales to North American wholesale customers. The International segment operates department store concession shop-in-shop locations and retail and outlet stores, as well as e-commerce Websites. The Stuart Weitzman segment includes sales across the world generated by the Stuart Weitzman brand, primarily through department stores in North America and international locations, and within Stuart Weitzman operated stores (including the Internet) in the United States, Canada and Europe.

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