not just gear-heads that love this Missouri
based auto parts retailer; Wall Street has been driving this stock
higher for the
past 8 months straight.
good news is that O’Reilly continues to
deliver results. They beat EPS estimates last quarter and
margins throughout 2011. New car sales are improving, but
still finding value in their used vehicles and doing minor repairs
themselves. The DIY movement across the US seems to be
O’Reilly doesn’t just cater to individuals;
they deliver parts to local shops around the country quickly,
at competitive prices, which is a large part of their
question is: can ORLY maintain this momentum
Company Description &
O’Reilly is an automotive parts company founded in 1957 which from
beginnings has grown to 3,613 stores around the country with over
employees. 100% of their business is focused in 39 states
US. They are looking to grab market share by rapidly
expanding into new
locations; opening 170 new stores in 2011 with 180 new sites planned
their past report the company painted a
bright picture for 2012, which added fuel to the fire burning in their
performance stock appreciation engine. In the coming year we
expect to see management focused on brand strength, efficiency and
also plan on increasing media reach with an
advertising plan that includes the introduction of television along
a strong radio advertising schedule and the continued involvement in
Financial Profile &
O’Reilly is a mid-cap ($10.68 billion) company that is trading at about
times trailing earnings (P/E). Looking forward, Zacks
are calling for that number to drop closer to 18 with no change in
the next year. O’Reilly became a Zacks Rank #1 Strong Buy on
parts company reported a quarterly sales
decrease of 9% at their last earnings report. Annual sales
were still up
7% compared to 2010 with total sales of roughly $5.78 billion in
ORLY earnings rose from $2.95 per share in FY2010 to $3.71 in
O’Reilly is expected to earn $4.49 per share in FY2012 according to the
the quarter, sales increased $81 million,
comprised of a $43 million increase in comp store sales, a $38 million
in non-comp store sales, a $2 million increase in non-comp non-store
a $2 million decrease from closed stores compared to 2010.
the year, ticket (receipt) average drove the
increase as DIY ticket count was under pressure for much of the year.
believe the increase in ticket average was the result of professional
growing faster than DIY sales and product mix tending towards hard
of which carry a higher ticket average.
O’Reilly’s sales guidance for 2012 is $6.15 billion to $6.25 billion.
comparable store sales growth guidance at 3% to 6%, the bulk of which
from strong growth in the professional side of the business, especially
acquired markets. They see DIY growth a little slower this
the first quarter, they see diluted earnings
per share coming in between $0.99 to $1.03. For the full year, diluted
guidance is $4.27 to $4.37 per share.
also saw free cash flow improve 134% to
$791 million for 2011 with anticipation of $600 to $650 million in 2012.
date, O’Reilly has bought back 16 million
shares with an average price of $61.63. In 2012, the company intends to
continue executing their programs with $362 million of cash on the
sheet as well as additional free cash flow generated during the year.
Market Performance &
The word momentum may be the only way to describe O’Reilly’s stock for
better part of the past year. Since early August the stock
about 50% and has remained above its 50- and 200-day moving averages
majority of that move, indicating a fairly constant and strong trend.
most of the market, ORLY is consolidating
just under its 52-week high of $85.32. Even yesterday’s
data couldn’t hold the stock down, but a market reversal would most
influence its bullish momentum. As a consumer-driven stock,
we need to
continue to see growth or at the very least stability in economic data.
ORLY has exceeded the S&P 500’s performance
by over 43% in the past year, but has fallen about 3% short of its
moves over the past 3 months.
A Levy is the Momentum Stock Strategist
for Zacks.com. He is also the Editor in charge of the market-beating Zacks