Using an unlevered Free Cash Flow to Firm (FCFF) model, we project O'Reilly Automotive, Inc.'s cash flows over 5 years with line-by-line expense modeling. Revenue is projected revenue growing from 6.5% to 5.0% annually, with expenses (COGS, SG&A, R&D) held at historical ratios. Depreciation is computed from a vintage matrix based on a 5-year useful life. Working capital is modeled using historical turnover days (DSO 11, DPO 292, DIO 226). At a 8.2% WACC with mid-year discounting, the terminal value (84% of enterprise value) is derived by applying the industry peer median EV/EBITDA multiple of 18.8x to Year 6 EBITDA. After subtracting net debt, the equity value implies a fair price of $94.25 per share, suggesting ORLY is fairly valued by 1.8% at the current price of $92.58.
Adjust parameters to explore scenarios. Changes are for exploration only and do not affect saved valuations.
| 2026 | 2027 | 2028 | 2029 | 2030 | Terminal | |
|---|---|---|---|---|---|---|
| Profit Before Tax | 3,612 | 3,835 | 4,074 | 4,177 | 4,386 | 4,495 |
| (−) Net Interest | 231 | 246 | 261 | 268 | 281 | 288 |
| (+) D&A | 841 | 952 | 1,050 | 1,074 | 1,100 | 1,127 |
| EBITDA | 4,684 | 5,033 | 5,386 | 5,518 | 5,766 | 5,910 |
| (−) Tax | 793 | 842 | 894 | 917 | 963 | — |
| (−) CapEx | 996 | 1,058 | 1,124 | 1,152 | 1,209 | — |
| (−) ΔWC | -265 | -67 | -72 | -31 | -63 | — |
| Free Cash Flow (FCF) | 3,160 | 3,200 | 3,440 | 3,481 | 3,657 | — |
| Peers' EBITDA Multiple | 18.8x | |||||
| Terminal Value | 111,233 | |||||
| WACC / Discount Rate | 8.18% | |||||
| Timing of FCF (mid year) | 0.5 | 1.5 | 2.5 | 3.5 | 4.5 | 5 |
| Present Value of FCF | 3,038 | 2,844 | 2,826 | 2,643 | 2,567 | 75,064 |
| Enterprise Value | 88,982 | |||||
| Projection Period | 13,918 | 15.6% | ||||
| Terminal Value | 75,064 | 84.4% | ||||
| (−) Current Net Debt | 8,298 | |||||
| Equity Value | 80,684 | |||||
| (÷) Outstanding Shares | 856M | |||||
| Fair Price | $94 | +1.8% | ||||
| WACC \ EV/EBITDA Exit Multiple | 14.8x | 16.8x | 18.8x | 20.8x | 22.8x |
|---|---|---|---|---|---|
| 6.2% | $83 | $93 | $104 | $114 | $124 |
| 7.2% | $79 | $89 | $99 | $109 | $118 |
| 8.2% | $76 | $85 | $94 | $104 | $113 |
| 9.2% | $72 | $81 | $90 | $99 | $108 |
| 10.2% | $69 | $77 | $86 | $94 | $103 |
Current price: $92.58. Green = undervalued, Red = overvalued.
Based on default parameters
This is an unlevered Free Cash Flow to Firm (FCFF) model with a 5-year projection period. Revenue, expenses, D&A, and working capital are projected using the same line-by-line approach as the Growth Exit models. The key difference is the terminal value methodology: instead of assuming perpetual cash flow growth, the terminal value is calculated by applying the industry peer median EV/EBITDA multiple to the projected Year 6 EBITDA.
Using a peer exit multiple anchors the terminal value to how the market currently prices comparable companies, rather than relying on a theoretical perpetual growth assumption. This approach captures relative valuation dynamics and is particularly useful when a company is expected to converge toward industry-average profitability over time. The sensitivity matrix shows how fair value changes across different WACC and EV/EBITDA multiple scenarios.