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O'Reilly Automotive (ORLY) Q3 Earnings: Is a Beat Likely?
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O'Reilly Automotive Inc. (ORLY - Free Report) is set to release third-quarter 2018 earnings on Oct 24. In the last reported quarter, the company delivered a positive surprise of 5.9%. It surpassed expectations in all of the trailing four quarters, with an average beat of 3.3%.
In the past three months, shares of O'Reilly Automotive have outperformed the industry it belongs to. The stock has advanced 13.4% compared with 5.3% increase recorded by the industry during the period.
Let’s see, how things are shaping up for this announcement.
Our proven model shows that O’Reilly Automotive is likely to beat earnings estimates this quarter. This is because a stock needs to have the right combination of the two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for increasing the odds of an earnings beat.
Earnings ESP: O’Reilly Automotive has an Earnings ESP of +0.51% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.33 and $4.30, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: O’Reilly Automotive currently carries a Zacks Rank #1.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
What’s Driving Better-Than-Expected Earnings
For third-quarter 2018, O’Reilly Automotive projects diluted earnings per share of $4.2-$4.3 compared with $3.22 recorded in the prior-year quarter. It expects consolidated comparable store sales of 2-4%, rising from 1.8% in third-quarter 2017. Positive demand from both Do-it-Yourself (DIY) customers and Do-it-for-Me (DIFM) or professional installers will aid the company’s third-quarter 2018 earnings.
O’Reilly Automotive’s strategy to open stores across the country enabled it to expand presence across 29 different states. During the first half of 2018, the company opened 128 net new stores. It is in sync with its goal to open 200 stores by 2018 end. Apart from existing markets, store openings aid O’Reilly Automotive to expand in new and less-populated areas.
Moreover, the company benefits from its dual-market strategy and is continuously benefiting from a strong distribution network.
For the soon-to-be-released quarter, the Zacks Consensus Estimate for sales per weighted-average store stands at $480,000, in-line with the actual figure of second-quarter 2018. Further, the Zacks Consensus Estimate for number of stores opened is 36 compared with 56 in the last reported quarter.
However, O’Reilly Automotive’s dependence on weather cycle for product sales is a concern. During the third quarter, the company’s sales might have been impaired by Hurricane Florence that took place in September. Additionally, O’Reilly Automotive is experiencing continuous rise in SG&A expenses, majorly due to store openings and maintaining the old ones, which might hurt margins.
Other Stocks to Consider
Here are a few other stocks worth considering from the same space, with the right combination of elements to outpace earnings estimates this time around:
Cummins Inc. (CMI - Free Report) has an Earnings ESP of +1.46% and a Zacks Rank #3. The company will report third-quarter 2018 financial figures on Oct 30.
Meritor, Inc. has an Earnings ESP of +2.36% and a Zacks Rank #3. The company’s fourth-quarter fiscal 2018 financial results are scheduled to be released on Nov 14.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank of 3. The company’s third-quarter 2018 financial results are scheduled to be released on Nov 2.
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Image: Bigstock
O'Reilly Automotive (ORLY) Q3 Earnings: Is a Beat Likely?
O'Reilly Automotive Inc. (ORLY - Free Report) is set to release third-quarter 2018 earnings on Oct 24. In the last reported quarter, the company delivered a positive surprise of 5.9%. It surpassed expectations in all of the trailing four quarters, with an average beat of 3.3%.
In the past three months, shares of O'Reilly Automotive have outperformed the industry it belongs to. The stock has advanced 13.4% compared with 5.3% increase recorded by the industry during the period.
Let’s see, how things are shaping up for this announcement.
O'Reilly Automotive, Inc. Price and EPS Surprise
O'Reilly Automotive, Inc. Price and EPS Surprise | O'Reilly Automotive, Inc. Quote
Why a Positive Surprise is Likely
Our proven model shows that O’Reilly Automotive is likely to beat earnings estimates this quarter. This is because a stock needs to have the right combination of the two key ingredients — a positive Earnings ESP and a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — for increasing the odds of an earnings beat.
Earnings ESP: O’Reilly Automotive has an Earnings ESP of +0.51% as the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.33 and $4.30, respectively. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: O’Reilly Automotive currently carries a Zacks Rank #1.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
What’s Driving Better-Than-Expected Earnings
For third-quarter 2018, O’Reilly Automotive projects diluted earnings per share of $4.2-$4.3 compared with $3.22 recorded in the prior-year quarter. It expects consolidated comparable store sales of 2-4%, rising from 1.8% in third-quarter 2017. Positive demand from both Do-it-Yourself (DIY) customers and Do-it-for-Me (DIFM) or professional installers will aid the company’s third-quarter 2018 earnings.
O’Reilly Automotive’s strategy to open stores across the country enabled it to expand presence across 29 different states. During the first half of 2018, the company opened 128 net new stores. It is in sync with its goal to open 200 stores by 2018 end. Apart from existing markets, store openings aid O’Reilly Automotive to expand in new and less-populated areas.
Moreover, the company benefits from its dual-market strategy and is continuously benefiting from a strong distribution network.
For the soon-to-be-released quarter, the Zacks Consensus Estimate for sales per weighted-average store stands at $480,000, in-line with the actual figure of second-quarter 2018. Further, the Zacks Consensus Estimate for number of stores opened is 36 compared with 56 in the last reported quarter.
However, O’Reilly Automotive’s dependence on weather cycle for product sales is a concern. During the third quarter, the company’s sales might have been impaired by Hurricane Florence that took place in September. Additionally, O’Reilly Automotive is experiencing continuous rise in SG&A expenses, majorly due to store openings and maintaining the old ones, which might hurt margins.
Other Stocks to Consider
Here are a few other stocks worth considering from the same space, with the right combination of elements to outpace earnings estimates this time around:
Cummins Inc. (CMI - Free Report) has an Earnings ESP of +1.46% and a Zacks Rank #3. The company will report third-quarter 2018 financial figures on Oct 30.
You can see the complete list of today’s Zacks #1 Rank stocks here.
Meritor, Inc. has an Earnings ESP of +2.36% and a Zacks Rank #3. The company’s fourth-quarter fiscal 2018 financial results are scheduled to be released on Nov 14.
American Axle & Manufacturing Holdings, Inc. (AXL - Free Report) has an Earnings ESP of +1.70% and a Zacks Rank of 3. The company’s third-quarter 2018 financial results are scheduled to be released on Nov 2.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>