Return on Equity (ROE)
since 2005
Calculation
O’Reilly Automotive Inc., ROE, long-term trends, calculation
| ROE | = | 100 | × | Net income1 | ÷ | Shareholders’ equity (deficit)1 | |
|---|---|---|---|---|---|---|---|
| Dec 31, 2021 | — | = | 100 | × | 2,164,685) | ÷ | (66,423) |
| Dec 31, 2020 | 1,249.34% | = | 100 | × | 1,752,302) | ÷ | 140,258) |
| Dec 31, 2019 | 350.09% | = | 100 | × | 1,391,042) | ÷ | 397,340) |
| Dec 31, 2018 | 374.50% | = | 100 | × | 1,324,487) | ÷ | 353,667) |
| Dec 31, 2017 | 173.62% | = | 100 | × | 1,133,804) | ÷ | 653,046) |
| Dec 31, 2016 | 63.77% | = | 100 | × | 1,037,691) | ÷ | 1,627,136) |
| Dec 31, 2015 | 47.48% | = | 100 | × | 931,216) | ÷ | 1,961,314) |
| Dec 31, 2014 | 38.55% | = | 100 | × | 778,182) | ÷ | 2,018,418) |
| Dec 31, 2013 | 34.09% | = | 100 | × | 670,292) | ÷ | 1,966,321) |
| Dec 31, 2012 | 27.78% | = | 100 | × | 585,746) | ÷ | 2,108,307) |
| Dec 31, 2011 | 17.85% | = | 100 | × | 507,673) | ÷ | 2,844,851) |
| Dec 31, 2010 | 13.07% | = | 100 | × | 419,373) | ÷ | 3,209,685) |
| Dec 31, 2009 | 11.45% | = | 100 | × | 307,498) | ÷ | 2,685,865) |
| Dec 31, 2008 | 8.16% | = | 100 | × | 186,232) | ÷ | 2,282,218) |
| Dec 31, 2007 | 12.18% | = | 100 | × | 193,988) | ÷ | 1,592,477) |
| Dec 31, 2006 | 13.06% | = | 100 | × | 178,085) | ÷ | 1,364,096) |
| Dec 31, 2005 | 14.34% | = | 100 | × | 164,266) | ÷ | 1,145,769) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
1 US$ in thousands
The financial trajectory from 2005 to 2021 is characterized by a consistent increase in profitability juxtaposed with a significant and sustained reduction in shareholders' equity, resulting in an exponential increase in the return on equity (ROE) ratio.
- Net Income Trends
- Net income demonstrated a strong and nearly uninterrupted upward trend over the analyzed period. From 2005 to 2010, earnings grew from 164.2 million USD to 419.4 million USD. This growth accelerated further after 2011, surpassing 1 billion USD in 2015 and reaching 2.16 billion USD by 2021. The consistent growth in net income indicates a robust expansion of operational profitability.
- Shareholders' Equity Dynamics
- Shareholders' equity exhibited a divergent pattern compared to net income. Equity increased steadily from 1.15 billion USD in 2005 to a peak of 3.21 billion USD in 2010. Following this peak, a persistent downward trend occurred, with equity falling to 653 million USD by 2017 and continuing to decline until it transitioned into a deficit of 66.4 million USD in 2021. This suggests an aggressive capital allocation strategy, likely involving significant share repurchases or dividend distributions that exceeded retained earnings.
- Return on Equity (ROE) Analysis
- The ROE evolved through three distinct phases. Between 2005 and 2010, ROE remained relatively stable, fluctuating between 8.16% and 14.34%. From 2011 to 2016, the ratio began to climb rapidly, moving from 17.85% to 63.77% as net income rose while equity began to contract. The final phase, from 2017 to 2020, saw an explosive increase in ROE, peaking at 1,249.34% in 2020. This extreme elevation is a mathematical consequence of the shrinking equity base approaching zero. By 2021, the transition to negative shareholders' equity rendered the standard ROE calculation inapplicable.
In summary, the financial profile shifted from a traditional equity-funded growth model to a highly leveraged capital structure. The exponential rise in ROE was driven less by a proportional increase in earnings and more by the systemic reduction of the equity denominator, culminating in a deficit position by the end of the period.
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Comparison to Competitors
O’Reilly Automotive Inc., ROE, long-term trends, comparison to competitors
| O’Reilly Automotive Inc. | Amazon.com Inc. | Home Depot Inc. | Lowe’s Cos. Inc. | TJX Cos. Inc. | |
|---|---|---|---|---|---|
| Dec 31, 2021 | — | 24.13% | 390.00% | 406.05% | 1.55% |
| Dec 31, 2020 | 1,249.34% | 22.84% | — | 217.09% | 55.01% |
| Dec 31, 2019 | 350.09% | 18.67% | — | 63.50% | 60.61% |
| Dec 31, 2018 | 374.50% | 23.13% | 593.54% | 58.69% | 50.66% |
| Dec 31, 2017 | 173.62% | 10.95% | 183.64% | 48.07% | 50.95% |
| Dec 31, 2016 | 63.77% | 12.29% | 110.97% | 33.26% | 52.88% |
| Dec 31, 2015 | 47.48% | 4.45% | 68.06% | 27.07% | 51.95% |
| Dec 31, 2014 | 38.55% | -2.24% | 43.00% | 19.29% | 50.53% |
| Dec 31, 2013 | 34.09% | 2.81% | 25.51% | 14.14% | 52.01% |
| Dec 31, 2012 | 27.78% | -0.48% | 21.70% | 11.12% | 46.62% |
| Dec 31, 2011 | 17.85% | 8.13% | 17.67% | 11.10% | 43.33% |
| Dec 31, 2010 | 13.07% | 16.78% | 13.72% | 9.35% | 42.00% |
| Dec 31, 2009 | 11.45% | 17.16% | 12.71% | 12.16% | 41.26% |
| Dec 31, 2008 | 8.16% | 24.14% | 24.81% | 17.45% | 36.21% |
| Dec 31, 2007 | 12.18% | 39.77% | 23.02% | 19.75% | 32.23% |
| Dec 31, 2006 | 13.06% | 44.08% | 21.70% | 19.32% | 36.48% |
| Dec 31, 2005 | 14.34% | 145.93% | 20.70% | 18.86% | 40.17% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Sector (Consumer Discretionary Distribution & Retail)
O’Reilly Automotive Inc., ROE, long-term trends, comparison to sector (consumer discretionary distribution & retail)
| O’Reilly Automotive Inc. | Consumer Discretionary Distribution & Retail | |
|---|---|---|
| Dec 31, 2021 | — | 35.05% |
| Dec 31, 2020 | 1,249.34% | 40.86% |
| Dec 31, 2019 | 350.09% | 40.77% |
| Dec 31, 2018 | 374.50% | 44.19% |
| Dec 31, 2017 | 173.62% | 38.11% |
| Dec 31, 2016 | 63.77% | 37.81% |
| Dec 31, 2015 | 47.48% | 32.09% |
| Dec 31, 2014 | 38.55% | 24.32% |
| Dec 31, 2013 | 34.09% | 19.26% |
| Dec 31, 2012 | 27.78% | 15.66% |
| Dec 31, 2011 | 17.85% | 15.30% |
| Dec 31, 2010 | 13.07% | 14.12% |
| Dec 31, 2009 | 11.45% | 14.43% |
| Dec 31, 2008 | 8.16% | 22.32% |
| Dec 31, 2007 | 12.18% | 22.78% |
| Dec 31, 2006 | 13.06% | 21.78% |
| Dec 31, 2005 | 14.34% | 21.81% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).
Comparison to Industry (Consumer Discretionary)
O’Reilly Automotive Inc., ROE, long-term trends, comparison to industry (consumer discretionary)
| O’Reilly Automotive Inc. | Consumer Discretionary | |
|---|---|---|
| Dec 31, 2021 | — | 33.71% |
| Dec 31, 2020 | 1,249.34% | 24.49% |
| Dec 31, 2019 | 350.09% | 34.62% |
| Dec 31, 2018 | 374.50% | 34.33% |
| Dec 31, 2017 | 173.62% | 22.85% |
| Dec 31, 2016 | 63.77% | 28.74% |
| Dec 31, 2015 | 47.48% | 29.03% |
| Dec 31, 2014 | 38.55% | 20.60% |
| Dec 31, 2013 | 34.09% | 20.34% |
| Dec 31, 2012 | 27.78% | 21.97% |
| Dec 31, 2011 | 17.85% | 34.92% |
| Dec 31, 2010 | 13.07% | 24.34% |
| Dec 31, 2009 | 11.45% | 25.32% |
| Dec 31, 2008 | 8.16% | 1.64% |
| Dec 31, 2007 | 12.18% | 16.06% |
| Dec 31, 2006 | 13.06% | 3.84% |
| Dec 31, 2005 | 14.34% | 19.92% |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31), 10-K (reporting date: 2016-12-31), 10-K (reporting date: 2015-12-31), 10-K (reporting date: 2014-12-31), 10-K (reporting date: 2013-12-31), 10-K (reporting date: 2012-12-31), 10-K (reporting date: 2011-12-31), 10-K (reporting date: 2010-12-31), 10-K (reporting date: 2009-12-31), 10-K (reporting date: 2008-12-31), 10-K (reporting date: 2007-12-31), 10-K (reporting date: 2006-12-31), 10-K (reporting date: 2005-12-31).