When share prices of great businesses are in decline, the sharpest investors are quick to analyze the situation. There might be a rare opportunity to buy stocks while they’re on the dip.

In the past five years, this industry-leading company’s shares are up 174% (as of March 19). This is a market-crushing performance that easily outpaces the 82% total return of the S&P 500. However, the stock price has tanked 19% over the last seven months.

Are investors staring at a no-brainer buying opportunity right now?

Economic winds are always changing, but this company isn’t fazed

Businesses that sell products or services that customers need in any economic environment are a special breed. This is the best way to describe O’Reilly Automotive (ORLY 0.69%). It operates 6,447 stores in the U.S. that sell aftermarket auto parts to DIY and professional customers, giving it a mission-critical position for people who always need functioning vehicles.

O’Reilly is a steady performer. It reported a same-store-sales increase of 4.7% in 2025. This was the 33rd straight year that the business posted positive comparables.

Growth is also an important part of the story. The company’s revenue and net income have climbed at compound annual rates of 8.3% and 10.8%, respectively, between 2015 and 2025. O’Reilly’s expansion stems from its ability to open new stores, with 207 locations added last year and 225 to 235 planned for 2026.

Management also operates with a strict capital allocation policy of returning excess cash to shareholders. Over the last three years, O’Reilly spent $7.4 billion on stock buybacks, which equates to about 10% of the current market cap. This keeps existing investors happy since it boosts earnings per share.

O’Reilly Automotive

Today’s Change

(-0.69%) $-0.61

Current Price

$87.30

This crucial variable has always been a concern

Even though O’Reilly’s stock has trounced the S&P 500 in the past five years, valuation has always been a reason for prospective investors to be uneasy. The shares traded at a price-to-earnings (P/E) ratio of 38.6 in September last year, when the stock was at its all-time-high. And in the past five years, the P/E multiple averaged 26.6. Now that the shares have taken a hit over the last seven months, the current P/E ratio of 29.5 might be a bit more compelling.

I still believe this retail stock is on the expensive side and isn’t in a good position to beat the market. If the P/E multiple fell below 25, then O’Reilly would be a lot more interesting.

However, I can definitely understand if certain investors want to take advantage of the recent dip to acquire shares in a high-quality business that has proven its worth.