O’Reilly Automotive Inc. (NASDAQ:ORLY)

Total Asset Turnover

The reported total asset turnover remained stable at 1.19 for 2017 and 2018, declined to 0.95 in 2019, then gradually improved to 1.00 in 2020 and further to 1.14 by 2021. The adjusted total asset turnover follows a similar pattern, showing stability around 0.94–0.96 in the early years, a slight dip in 2019, and a notable improvement by 2021. This suggests enhanced efficiency in using assets to generate sales during the latter period.

Current Ratio

Both reported and adjusted current ratios exhibit a consistent downward trend over the five-year period. Beginning near 0.93–0.95 in 2017, the ratios declined steadily to 0.77–0.78 by 2021. This decline indicates reduced short-term liquidity and potential tightening of working capital management.

Debt to Equity Ratio

The reported debt to equity ratio increased markedly from 4.56 in 2017 to a peak of 29.4 in 2020, with no reported value for 2021. The adjusted ratio also shows a rising trend, though with a moderation in 2020 at 16.26 before surging to 29.15 in 2021. This pattern indicates a significant increase in leverage, reflecting greater reliance on debt financing relative to equity over time.

Debt to Capital Ratio

Reported debt to capital rose from 0.82 in 2017 to slightly above 1.00 in 2021, indicating that total debt exceeded total capital by the end of the period. The adjusted ratio similarly increased from 0.86 to 0.97, pointing to a heavier debt structure, though the adjusted figures suggest a somewhat more conservative assessment.

Financial Leverage

Reported financial leverage escalated sharply from 11.59 in 2017 to an extremely high level of 82.68 in 2020, with no data for 2021. The adjusted financial leverage shows a more moderated but still substantial increase from 11.91 in 2017 to 58.29 in 2021. This significant rise signifies an intensified use of debt relative to equity, amplifying financial risk.

Net Profit Margin

Reported net profit margin improved progressively, rising from 12.63% in 2017 to 16.24% in 2021. The adjusted margin closely follows this upward trend, increasing from 12.67% to 16.43%, indicating enhanced profitability and operational efficiency throughout the period.

Return on Equity (ROE)

The reported ROE exhibits extraordinary volatility and growth, increasing dramatically from 173.62% in 2017 to 1249.34% in 2020, with no data for 2021. The adjusted ROE, while lower in magnitude, also expands considerably from 142.13% to 1088.07% over the five years. This suggests exceptionally high returns to shareholders, largely driven by increasing leverage, but also reflects elevated financial risk and the possibility of distorted metrics due to high debt levels.

Return on Assets (ROA)

Reported ROA starts at 14.97% in 2017, fluctuates downward in 2019 to 12.98%, then rises to 18.47% by 2021. The adjusted ROA presents a smoother trend, starting at 11.93% and increasing steadily to 18.67%. These figures show improving overall asset profitability, demonstrating enhanced efficiency in asset utilization across the period.

The financial data indicates a consistent upward trend in sales figures, with values rising steadily from approximately $8.98 billion in 2017 to around $13.33 billion in 2021. This represents substantial growth over the five-year period. Similarly, total assets increased each year, starting at roughly $7.57 billion in 2017 and reaching about $11.72 billion by 2021. The growth in total assets was particularly notable between 2018 and 2019, when there was a sharp increase of over 3 billion dollars.

Examining the reported total asset turnover ratio, there is a relatively stable pattern in the initial years, with a ratio of 1.19 in both 2017 and 2018, followed by a decline to 0.95 in 2019. The ratio slightly recovered to 1.00 in 2020 and further increased to 1.14 in 2021. This suggests that the company's efficiency in generating sales from its assets dipped in 2019 but improved steadily afterward.

When looking at adjusted figures, adjusted sales mirror the upward trajectory observed with reported sales, moving from about $8.98 billion in 2017 to $13.33 billion in 2021. Adjusted total assets show a gradual increase from approximately $9.53 billion in 2017 to around $11.73 billion in 2021, reflecting a more moderate growth than the reported total assets.

The adjusted total asset turnover ratio starts lower than the reported counterpart, at 0.94 in 2017, increasing marginally to 0.96 in 2018, maintaining at 0.95 in 2019, then rising to 1.00 in 2020 and 1.14 in 2021. This progression reflects an improving ability to generate sales from the adjusted asset base over time, particularly from 2020 onwards.

Sales Growth

Consistent annual growth is evident, with sales increasing approximately 48.5% over five years.

Total Assets

Steady growth is observed, with a notable surge between 2018 and 2019, indicating significant asset acquisition or revaluation in that period.

Total Asset Turnover Ratios

Both reported and adjusted turnover ratios experienced a decline in 2019, followed by recovery and improvement through 2021, suggesting enhanced operational efficiency or improved asset utilization in the recent years.

Adjusted versus Reported Figures

Adjusted figures appear to moderate the asset values, presenting a smoother growth trend. The convergence of reported and adjusted turnover ratios by 2021 may indicate alignment in the assessment metrics or accounting adjustments stabilizing over time.

Current Assets

The company’s current assets exhibited a gradual upward trend over the five-year period. Starting at approximately $3.40 billion in 2017, current assets increased consistently each year, reaching about $4.50 billion in 2021. This reflects a steady growth in liquid resources and short-term assets available to the company.

Current Liabilities

Current liabilities showed a consistent increase from $3.65 billion in 2017 to roughly $5.87 billion in 2021. The year-over-year rise in liabilities outpaced the growth in current assets, indicating a growing obligation to settle short-term debts or payables.

Reported Current Ratio

The reported current ratio declined over the analyzed period from 0.93 in 2017 to 0.77 in 2021. A current ratio below 1 implies that current liabilities exceed current assets, and the downward trend suggests deteriorating liquidity and a potential increase in short-term financial risk.

Adjusted Current Assets

Adjusted current assets mirrored the upward pattern of reported current assets, increasing from approximately $3.41 billion in 2017 to $4.52 billion in 2021. The adjustments made to the asset base appear consistent with the trend seen in the reported figures, affirming the growth in liquid asset capacity.

Adjusted Current Liabilities

Adjusted current liabilities rose substantially over the period, from about $3.60 billion in 2017 to $5.80 billion in 2021. This increase parallels that of the reported liabilities and confirms a significant expansion in short-term obligations on an adjusted basis.

Adjusted Current Ratio

The adjusted current ratio shows a similar downward trajectory as the reported ratio, decreasing from 0.95 in 2017 to 0.78 in 2021. This trend reinforces the observation of declining liquidity when adjustments to assets and liabilities are considered, suggesting ongoing pressure on the company's ability to cover short-term debts.

Overall Analysis

The financial data reveals a growing balance sheet with rising current assets and liabilities. However, the increase in current liabilities surpasses that of current assets, leading to a declining current ratio over the years. Both reported and adjusted figures consistently signify a reduction in liquidity, highlighting a potential need for closer management of short-term financial obligations and working capital optimization.

The financial data shows notable trends in both debt levels and equity positions over the five-year period under review.

Total Debt

Total debt consistently increased from 2,978,390 thousand US dollars in 2017 to a peak of 4,123,217 thousand US dollars in 2020, before slightly decreasing to 3,826,978 thousand US dollars in 2021.

Shareholders’ Equity (Deficit)

Shareholders’ equity experienced a significant decline, starting at 653,046 thousand US dollars in 2017 and decreasing sharply to a deficit of 66,423 thousand US dollars by 2021. The equity values dropped dramatically in 2018 and 2020, reflecting worsening financial position over time.

Reported Debt to Equity Ratio

The reported debt to equity ratio rose markedly from 4.56 in 2017 to an extreme 29.4 in 2020, indicating increasing leverage and risk. Data is missing for 2021, likely due to the negative equity complicating the ratio's calculation.

Adjusted Total Debt

Adjusted total debt, which presumptively includes off-balance sheet liabilities or other adjustments, rose steadily from 4,923,983 thousand US dollars in 2017 to a peak of 6,164,686 thousand US dollars in 2020, before a slight decrease to 5,866,567 thousand US dollars in 2021. This pattern mirrors the trend in reported total debt but at higher absolute levels.

Adjusted Shareholders’ Equity (Deficit)

Adjusted shareholders’ equity also declined from 800,267 thousand US dollars in 2017 to 201,258 thousand US dollars in 2021, with fluctuations noticeable especially in 2018 and 2020. Despite remaining positive, the equity base eroded considerably.

Adjusted Debt to Equity Ratio

The adjusted debt to equity ratio depicts increasing leverage as well, rising from 6.15 in 2017 to a high of 29.15 in 2021 after peaking at 16.26 in 2020. The sizeable jump in the final year signals intensified financial risk, corroborated by the declining equity levels.

Overall, the analysis reveals an increasing reliance on debt financing with a diminishing equity cushion. The sharp rises in debt to equity ratios, both reported and adjusted, indicate growing financial leverage and potential risk. The negative shareholders’ equity in 2021 suggests potential solvency concerns, warranting close monitoring. The slight reduction in total and adjusted debt in 2021 may represent efforts to deleverage, but the overall elevated leverage ratios remain a significant factor.

The financial data reveals several notable trends in the company's debt and capital structure over the five-year period ending December 31, 2021.

Total Debt

Total debt exhibited a consistent upward trajectory from 2017 through 2020, rising from approximately 2.98 billion to over 4.12 billion US dollars. However, in 2021, there was a reduction, bringing total debt down to roughly 3.83 billion. This suggests a recent effort to deleverage or reduce borrowings following a period of steady increase.

Total Capital

Total capital also increased from 3.63 billion US dollars in 2017 to a peak of about 4.29 billion in 2019 but subsequently declined to 3.76 billion by 2021. The decrease in total capital in the latter years, particularly 2021, possibly reflects changes in equity or retained earnings, or impacts from the reduction in total debt.

Reported Debt to Capital Ratio

The reported debt to capital ratio started at 0.82 in 2017, climbed steadily, reaching 0.97 in 2020, and further increased slightly above 1.0 by the end of 2021. The ratio exceeding 1.0 in the last year analyzed indicates that total debt has surpassed total capital, signaling a higher financial leverage and potentially increased risk exposure.

Adjusted Total Debt

Adjusted total debt, which may account for additional liabilities or off-balance-sheet obligations, followed a similar upward trend, increasing each year from about 4.92 billion in 2017 to 6.16 billion in 2020. A slight decrease to around 5.87 billion occurred in 2021, mirroring the behavior of reported total debt.

Adjusted Total Capital

Adjusted total capital rose progressively from 5.72 billion in 2017 to approximately 6.54 billion in 2020, then declined in 2021 to around 6.07 billion. Despite the decrease, adjusted capital remains significantly higher than total capital, reflecting broader capital base considerations.

Adjusted Debt to Capital Ratio

The adjusted debt to capital ratio steadily increased from 0.86 in 2017 to 0.94 in 2020, reaching 0.97 in 2021. Although this ratio did not exceed 1.0, the upward trend indicates growing leverage when accounting for adjustments, suggesting sustained increases in debt relative to capital.

Overall, the company displayed an increasing reliance on debt financing over the five-year span, with both reported and adjusted debt-to-capital ratios rising consistently. The recent decreases in total and adjusted debt in 2021 point to potential efforts to manage leverage levels, but the ratios remain elevated compared to the starting point in 2017. This pattern could imply a strategic approach to balancing growth financing with financial risk.

The financial data reveals a consistent increase in total assets over the five-year period, rising from approximately $7.57 billion at the end of 2017 to about $11.72 billion by the end of 2021. This indicates a steady expansion in the company’s asset base.

Shareholders’ equity exhibits a declining trend, initially decreasing from around $653 million in 2017 to a deficit of approximately $66 million by the close of 2021. A notable drop occurred between 2019 and 2021, with equity turning negative in 2021, which may raise concerns about the company's net asset position.

Reported financial leverage, calculated as the ratio of total liabilities to shareholders’ equity, demonstrates volatility and an upward trend until 2020, reaching a notably high level of 82.68. Data for 2021 is absent, but the pattern suggests increasing reliance on debt relative to equity over the period.

Adjusted total assets also increase steadily from about $9.53 billion in 2017 to roughly $11.73 billion in 2021, reflecting the asset growth after adjustments. Adjusted shareholders’ equity similarly decreases but remains positive throughout, dropping from approximately $800 million in 2017 to about $201 million in 2021, indicating the adjustments yield a less severe decline than the unadjusted figures.

Adjusted financial leverage fluctuates, starting at 11.91 in 2017, decreasing through 2019, then escalating significantly in 2020 and 2021 to levels of 30.61 and 58.29 respectively. This pattern suggests a shift towards increased leverage in recent years when considering the adjusted metrics, although the leverage ratios remain lower than the reported figures, suggesting that the adjustments account for some mitigating factors.

Overall, the data illustrates asset growth paired with declining shareholder equity and rising financial leverage, particularly pronounced in the later years of the period analyzed. This trend could imply increased borrowing and financial risk, warranting closer examination of the underlying factors contributing to the equity decline and leverage increase.

Total Assets

Consistent growth from $7.57 billion to $11.72 billion over five years.

Shareholders’ Equity

Decline from positive $653 million to negative $66 million, indicating erosion of equity.

Reported Financial Leverage

Rising leverage ratios peaking at 82.68 in 2020, with 2021 data missing.

Adjusted Total Assets

Increased steadily, closely mirroring total assets but starting from a higher base.

Adjusted Shareholders’ Equity

Decreased from $800 million to $201 million, remaining positive despite decline.

Adjusted Financial Leverage

Decreased initially, then rose sharply in the last two years, reaching 58.29 in 2021.

The financial data reveals a consistent upward trend in key performance indicators over the five-year period.

Net Income and Adjusted Net Income

Net income increased steadily from $1,133,804 thousand in 2017 to $2,164,685 thousand in 2021, showing significant growth. Adjusted net income, which likely excludes certain one-time items, mirrors this pattern with an increase from $1,137,396 thousand to $2,189,837 thousand over the same period. The strong rise in adjusted net income suggests improving underlying profitability and operational performance.

Sales and Adjusted Sales

Sales grew continuously from $8,977,726 thousand in 2017 to $13,327,563 thousand in 2021, reflecting robust revenue expansion. Adjusted sales closely track reported sales figures and present a similar growth trajectory, indicating consistency in revenue recognition and minimal effect of adjustments.

Net Profit Margins

Reported net profit margin demonstrated an upward trend from 12.63% in 2017 to 16.24% in 2021, denoting improved efficiency and profitability per unit of sales. Adjusted net profit margin also increased, moving from 12.67% to 16.43%, slightly higher than reported margins, which implies that adjusting for non-recurring items provides a more favorable view of profitability expansion.

General Observations

The consistent increases in sales, net income, and profit margins indicate enhanced operational efficiency and effective cost management. The spread between adjusted and reported figures is relatively narrow, suggesting stability in accounting policies and a limited impact of extraordinary items on the financial results. Overall, the financial trends reflect steady growth in both top-line and bottom-line metrics across the timeframe analyzed.

The financial data indicates a general upward trend in net income over the five-year period, increasing from approximately 1.13 billion US dollars in 2017 to 2.16 billion US dollars in 2021. Adjusted net income shows a similar pattern, rising steadily each year, reflecting consistent profitability improvement.

Shareholders’ equity exhibits considerable volatility. The reported shareholders’ equity declined sharply from 653 million US dollars in 2017 to a deficit position of approximately -66 million US dollars in 2021. Adjusted shareholders’ equity, although showing less severe fluctuations, also decreased substantially from 800 million US dollars in 2017 to around 201 million US dollars in 2021. This downward trend may be a concern regarding the company's net assets and capital structure.

The Return on Equity (ROE) percentages reveal notable variability. Reported ROE was extraordinarily high, exceeding 170% in 2017, jumping to over 1,200% in 2020, but data for 2021 is unavailable. Adjusted ROE follows a comparable trend, indicating very high returns on the adjusted equity base, with a peak in 2021 exceeding 1,000%. Such elevated ROE figures suggest that the company was generating substantial earnings relative to its equity base; however, the extreme values signal potential issues arising from the declining equity balances impacting the ratio calculations.

In summary, while profitability measured by net income and adjusted net income improved consistently, the equity base weakened significantly, leading to extreme ROE values. The decline in equity, particularly the move to a deficit in reported figures, warrants attention as it affects financial stability and may influence the company’s capacity to finance future growth.

Net Income

Steady increase from 1.13 billion to 2.16 billion US dollars between 2017 and 2021.

Adjusted Net Income

Consistent upward trend similar to net income, indicating improved profitability.

Shareholders’ Equity (Reported)

Significant decline from a positive 653 million US dollars in 2017 to a negative 66 million US dollars in 2021.

Adjusted Shareholders’ Equity

Decreased from 800 million US dollars to 201 million US dollars, showing a weakening equity position.

Reported ROE

Highly volatile and extreme values, peaking in 2020 over 1,200%, with no data reported for 2021.

Adjusted ROE

Also volatile and very high, culminating at approximately 1,088% in 2021, reflecting a shrinking equity base and rising earnings.

The financial data reveal several notable trends over the five-year period.

Net Income

Net income exhibited consistent growth from 2017 to 2021, increasing from approximately 1.13 billion USD to over 2.16 billion USD. This represents a near doubling across the period, indicating strong profitability improvements.

Total Assets

Total assets increased steadily as well, from about 7.57 billion USD in 2017 to 11.72 billion USD by 2021. This growth signals expansion in asset base, particularly a significant increase between 2018 and 2019 when total assets grew by approximately 2.73 billion USD.

Reported Return on Assets (ROA)

The reported ROA demonstrated some variability, initially rising from 14.97% in 2017 to 16.6% in 2018, followed by a decline to 12.98% in 2019. Subsequently, it rebounded to 18.47% in 2021, reaching the highest point in the period. This pattern suggests fluctuations in asset efficiency, with recent years showing marked improvement in generating profit from assets.

Adjusted Net Income

Adjusted net income values are consistently higher than the reported net income, following a similar upward trajectory from around 1.14 billion USD to nearly 2.19 billion USD by 2021. The adjusted figures underscore sustained profitability gains, potentially excluding one-time or non-recurring items.

Adjusted Total Assets

Adjusted total assets also steadily increased, starting at approximately 9.53 billion USD in 2017 and reaching 11.73 billion USD in 2021. The adjusted figures are generally higher than the reported totals, yet the growth trend mirrors that of the reported assets, reinforcing the view of continuous asset expansion.

Adjusted Return on Assets (ROA)

Adjusted ROA started at 11.93% in 2017, climbed steadily to 15.17% in 2020, and further to 18.67% in 2021. The consistent upward movement in adjusted ROA indicates improved operational efficiency and profitability when accounting for adjustments, aligning closely with the trends in adjusted net income and assets.

Overall, the data indicate a pattern of substantial growth in both profit and asset size, accompanied by enhanced efficiency in asset utilization as reflected in the increasing ROA figures. The variations between reported and adjusted metrics suggest adjustments play a meaningful role in reflecting the company's operational performance more accurately.