Company Description

O'Reilly Automotive sells automotive aftermarket parts, tools, supplies, equipment and accessories. The company provides new and remanufactured automotive hard parts, including alternators, starters, fuel pumps, water pumps, brake system components, batteries, belts, hoses, temperature control and chassis parts. Its stores also offer auto body paint and related materials, automotive tools, and professional service provider service equipment. As of December 31, 2011, it operated 3,740 stores in 39 states. The company was founded in 1957 and is headquartered in Springfield, Missouri.

O'Reilly Automotive Beats Estimates in Six of Seven Quarters

O'Reilly Automotive topped the Zacks Consensus Estimate in six of the last seven quarters. The average beat, including the quarter in line with expectations, of $0.07 translates to approximately 8.5% positive earnings surprise. The stock has moved higher by an average of about 2% following the earnings releases.

The September 2011 quarter had the largest impact on share price. The Zacks Consensus Estimate of $1.00 was beat by 10% or $0.10. This caused the stock to increase by more than 7% in the session following the earnings release. The quarter prior saw the company report earnings in line with expectations but was a little light on the topline. That top line miss helped push the stock lower by more than 4% in the session following that release.

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O'Reilly Automotive Most Recent Earnings Report

On April 23, 2012 O'Reilly Automotive reported revenue of $1.529 billion up from $1.382 billion reported in year ago quarter, an increase of 11%. Earnings per share came in at $1.14, $0.10 higher than the Zacks Consensus Estimate for a positive earnings surprise of 9.6%. In the session following the earnings release, the stock traded higher by more than 8%.

O'Reilly Automotive Sees Estimates Moving Higher

Estimates for O'Reilly Automotive have been rising of late. The Zacks Consensus Estimate for 2012 for O'Reilly Automotive stood at $4.38 as of January 2012. The consensus has since moved higher to $4.68. Over the same time period estimates for 2013 have moved from $5.01 to $5.37. The implied earnings growth rate of more than 14% is just what aggressive growth investors are seeking.

Valuation

O'Reilly Automotive trades slightly higher than the industry average for nearly every metric that aggressive growth investors tend to focus. The trailing twelve months PE of 23x is right in line with the industry average. The forward PE of 20x is slightly higher than the 17.7x industry average. The price to book multiple of 4.2x is higher than the 3x industry average, and the price to sales multiple carries a similar premium valuation.

The Chart

A quick look at the price and consensus chart shows a stock that has traced the consistent growth of the earnings estimates. This is the type of chart that aggressive growth investors love to see. The earnings estimates have guided the stock higher and the gaps between the earnings lines are the embodiment of the growth in earnings. The 2013 earnings estimate line should inspire investors as the line continues to move higher, which will likely help the stock higher in the future. O'Reilly Automotive is a Zacks #2 Rank (Buy).

Brian Bolan is the Aggressive Growth Stock Strategist for Zacks.com. He is also the Editor in charge of the Zacks Home Run Investor service

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