Back to top

Image: Bigstock

O'Reilly (ORLY) Gains on Store Expansion, Favorable Weather

Read MoreHide Full Article

On Aug 27, we issued an updated research report on O'Reilly Automotive, Inc. (ORLY - Free Report) .

The company is set to gain from store openings and the expansion of its distribution network. For 2018, it targets to open 200 stores. During the first six months of the year, the company opened 128 stores. These store openings in new and existing markets will enable O’Reilly to expand its presence in large markets as well as in scarcely populated areas that attract fewer competitions.

Last month, this automotive aftermarket parts’ specialty retailer reported second-quarter 2018 earnings. The company witnessed a year-over-year increase in revenues and adjusted earnings during the reported quarter. Moreover, both earnings and revenues surpassed the respective Zacks Consensus Estimate. Better weather conditions, along with positive demand in the industry, have aided O’Reilly to drive its financials.

O'Reilly Automotive, Inc. Price and Consensus

 

With the expectation of a similar trend to continue, the company anticipates earnings per share of $4.2-$4.3 and comparable store sales of 2-4% in third-quarter 2018. For 2018, it anticipates earnings per share of $15.7-$15.8 compared with $12.67 in the prior year.

Moreover, over the past 30 days, the company’s stock has seen the Zacks Consensus Estimate for third-quarter and 2018 earnings being revised 0.5% and 0.3% upward, respectively.

However, the dependence on weather condition for store sales is a concern for O’Reilly. Bad weather condition discourages customers, majorly DIY customers, from visiting the company stores. Rising SG&A expenses, majorly due to store openings and maintaining the existing ones, will also hamper profit margin for the company.

Price Performance

In the past six months, O’Reilly’s stock has gained 35.6%, outperforming 27.5% increase recorded by the industry it belongs to.

 



Zacks Rank & Other Key Picks

O’Reilly currently carries a Zacks Rank #2 (Buy). Some other top-ranked stocks in the auto space are Allison Transmission Holdings, Inc. (ALSN - Free Report) , Fox Factory Holdings Corporation (FOXF - Free Report) and Honda Motor Co., Ltd. (HMC - Free Report) . Allison Transmission and Fox Factory sport a Zacks Rank #1 (Strong Buy) while Honda carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Allison Transmission has an expected long-term growth rate of 10%. Shares of the company have risen 24.5% in the past six months.

Fox Factory has an expected long-term growth rate of 16.8%. Over the past six months, shares of the company have gained 73.2%.

Honda has an expected long-term growth rate of 3%. Over the past year, shares of the company have gained 9.2%.

Today's Stocks From Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +21.9% in 2017, our top stock-picking screens have returned +115.0%, +109.3%, +104.9%, +98.6% and +67.1%.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - 2017, the composite yearly average gain for these strategies has beaten the market more than 19X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>
 

Published in