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O'Reilly's (ORLY) Q3 Earnings Beat on Stellar Comps Growth

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O’Reilly Automotive Inc. (ORLY - Free Report) reported third-quarter 2020 diluted earnings per share of $7.07, surpassing the Zacks Consensus Estimate of $6.34.

Remarkable comparable store sales growth drove this outperformance. Comps grew 16.9% year on year, outpacing the Zacks Consensus Estimate of 9%. The bottom line also increased from $5.08 a share recorded in the prior-year quarter, marking an increase of 39.1% year on year.
 
This U.S.-based specialty retailer of automotive parts registered quarterly revenues of $3,207.6 million, which topped the consensus mark of $2,978 million. Moreover, the top line comes in higher than the prior-year level of $2,666.5 million.

As we already know, O’Reilly has withdrawn the previously-issued 2020 guidance, and will not resume any guidance, given the coronavirus pandemic-related uncertainty.

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

O’Reilly witnessed robust sales performance during the third quarter. The Do It Yourself business was a large contributor to the company’s comparable store sales growth. Comps growth of 16.9% year on year for the quarter compared much favorably with the prior-year period’s increase of 5%.


In addition, the company opened 36 new stores during the third quarter, bringing the total store count to 5,613 as on Sep 30, 2020, beating the Zacks Consensus Estimate of 5,603.

Financials, Share Repurchase & Costs

Notably, during the September-end quarter, selling, general and administrative expenses flared up to $955.5 million from the $886.2 million witnessed in third-quarter 2019. Nonetheless, operating income surged 35% to $725 million from the $536.4 million reported in the prior-year period on high sales. Net income amounted to $527.3 million, up 35% year over year.

The board of directors authorized additional $1 billion stock buyback over three years. Also, during the reported quarter, O’Reilly repurchased 1 million shares for $443 million at an average price of $458.7 per share. As of Oct 28, the company has $1.16 billion remaining under the current share-repurchase authorization.

The company had cash and cash equivalents of $1,627.1 million as of Sep 30, 2020. Its long-term debt stands at $4,122.4 million, up from the year-ago level of $3,703.6 million.

During the reported quarter, O’Reilly generated $790.1 million in cash from operating activities compared with the year-ago period’s $642.7 million. Capital expenditure amounted to $118.9 million compared with the year-earlier period’s $185.6 million. Free cash flow jumped to $662.8 million from the prior year’s $438.5 million, up 51.2% year on year.

Zacks Rank & Stocks to Consider

O’Reilly currently carries a Zacks Rank #3 (Hold). Shares of the company have appreciated 0.9%, year to date, while the industry has declined 1.9%.

Some better-ranked stocks in the auto sector are Lear Corporation (LEA - Free Report) , Autoliv Inc (ALV - Free Report) and LCI Industries (LCII - Free Report) , all of which sport 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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