O'Reilly Automotive, Inc.

The forensic screens give a mixed picture that rewards a closer read. The Beneish M-Score is -2.486, below the -1.78 threshold and not in the elevated manipulation-risk zone; in plain terms, this screen does not flag the reported figures as likely manipulated, though it is a statistical screen and not proof either way. The Piotroski F-Score is 9 of 9 computable signals, meaning every profitability, leverage, and efficiency test the model could compute passed. The Altman Z″-Score is 0.09, in the distress zone; this is a balance-sheet screen, and negative equity of -$763.35 million is a major reason to interpret it with caution. Operating cash flow to net income of 1.09 means 2025 cash generation covered earnings, but the ratio sits on a falling cash-flow trend. The MD&A Fog Index of 18.65 is above 18, the very hard to read band, so the operational detail in the filing may be demanding to follow. On the business side, the 10-Q describes 6,495 U.S. stores, 121 in Mexico and 28 in Canada as of March 31, 2026, with 225 to 235 planned net openings in 2026. The 10-K risk factors name tariffs, cybersecurity, acquired-business performance, key personnel, and increased debt levels. The filings show a growing business with strong comparable-store results, paired with rising borrowing and a cash-flow decline that the headline earnings growth does not explain.

Catalyst.Per the 10-Q for the quarter ended March 31, 2026, sales rose 10% to $4.56 billion from $4.14 billion, driven mainly by 8.1% growth in domestic comparable store sales, versus 3.6% a year earlier. Management attributes demand to rising miles driven, an aging vehicle fleet (average age 12.6 years in 2024, up from 11.4 years in 2014), and its dual market strategy serving both DIY and professional customers. Full-year 2025 revenue reached $17.78 billion, up 6.4%, with net income of $2.54 billion. The company opened 59 net new stores in the quarter and expects 225 to 235 net new store openings in 2026.

Hidden risk.The main tension is between earnings and cash. Operating cash flow fell from $3.05 billion in 2024 to $2.76 billion in 2025, even as net income rose from $2.39 billion to $2.54 billion, while long-term debt climbed from $5.52 billion to $6.02 billion. Equity remains negative at -$763.35 million, though it improved from -$1.37 billion. The Altman Z″-Score of 0.09 falls in the distress zone, a screening result tied to the balance-sheet profile rather than a prediction of failure. The 10-K risk factors list increased debt levels and credit rating downgrades, which readers may want to look at alongside the MD&A's discussion of inflation and tariffs.