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O'Reilly (ORLY) Q2 Earnings Beat on Strong Comps Growth

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O’Reilly Automotive Inc.’s (ORLY - Free Report) shares gained more than 7% in after-hours trading, after the firm posted stellar second-quarter 2020 results. It not only smashed earnings and revenue estimates, but also recorded year-over-year growth of the said metrics despite coronavirus woes.

The auto parts retailer reported second-quarter 2020 earnings per share of $7.10, which surpassed the Zacks Consensus Estimate of $4.10. Remarkable comparable store sales growth led to the outperformance. Precisely, comps grew 16.2% against the Zacks Consensus Estimate of a decline of 12%.

The bottom line also increased from $4.51 a share recorded in the prior-year quarter. O’Reilly’s quarterly revenues came in at $3,091.6 million, which topped the consensus mark of $2,502 million. Moreover, the top line was higher than the prior-year level of $2,589.8 million.

OReilly Automotive, Inc. Price, Consensus and EPS Surprise

OReilly Automotive, Inc. Price, Consensus and EPS Surprise

OReilly Automotive, Inc. price-consensus-eps-surprise-chart | OReilly Automotive, Inc. Quote

After witnessing coronavirus-led challenges in the first two weeks of the quarter ended Jun 30, O’Reilly witnessed a robust increase in sales volume for the rest of the quarter. Comps growth of 16.2% for the quarter under review compared much favorably with the prior-year period’s increase of 3.4% on the back of robust sales in May and June.

Notably, SG&A expenses increased to $900.7 million from $870.2 million in second-quarter 2019. Nonetheless, operating income rose to $736.5 million from $498.1 million reported in the prior-year quarter on the back of high sales. Net income amounted to $531.6 million, up 50% year over year.

While the company tapped brakes on the share repurchase program on Mar 16, it resumed the buyback program on May 29 in view of an improving business scenario.

During the reported quarter, O’Reilly repurchased 0.2 million shares for $77 million at an average price of $417.79 per share. The company currently has approximately $882 million remaining under the current share repurchase authorization. However, amid COVID-19-induced uncertainty, it has refrained from providing its annual guidance.

The company had cash and cash equivalents of $872.4 million as of Jun 30, 2020. Its long-term debt stands at $4,127.4 million, increasing from the year-ago level of $3,783.7 million.

During the quarter under review, O’Reilly generated $1,099.9 million in cash from operating activities compared with $406.4 million in the year-ago period. Capital expenditure amounted to $111.2 million compared with $142.7 million in the year-ago period. Free cash flow jumped to $985.7 million from $259.7 million a year ago. New stores opened during the quarter totaled 50, bringing the total store count to 5,583 as of Jun 30, 2020.

Zacks Rank & Other Key Picks

O’Reilly currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto sector include Sonic Automotive Inc. (SAH - Free Report) , Lithia Motors (LAD - Free Report) and AutoNation (AN - Free Report) , each carrying a Zacks Rank of 1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

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