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What's in Store for O'Reilly (ORLY) This Earnings Season?

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O'Reilly Automotive, Inc. (ORLY - Free Report) is slated to release third-quarter 2021 results on Oct 27, after the bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $6.93 per share on revenues of $3.22 billion.

This U.S.-based specialty retailer of automotive parts delivered better-than-anticipated results in the last reported quarter on remarkable growth in the comparable store sales.

Over the trailing four quarters, the company surpassed estimates on all occasions, the average surprise being 15.78%. This is depicted in the graph below:

O'Reilly Automotive, Inc. Price and EPS Surprise

O'Reilly Automotive, Inc. Price and EPS Surprise

O'Reilly Automotive, Inc. price-eps-surprise | O'Reilly Automotive, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for O’Reilly’s third-quarter earnings per share has been revised upward by 37 cents in the past 90 days. However, it compares unfavorably with the year-ago quarter’s earnings of $7.07 per share, indicating a year-on-year drop of 1.98%. Nonetheless, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year rise of 0.29%.

Earnings Whispers

Our proven model does not conclusively predict an earnings beat for O’Reilly for the to-be-reported quarter, as it does not have the right combination of the two key ingredients. A combination of a positive Earnings ESP, and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. However, this is not the case as elaborated below.

Earnings ESP: O’Reilly has an Earnings ESP of 0.00%. This is because the Most Accurate Estimate is at par with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: O’Reilly carries a Zacks Rank of 2, currently. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

O’Reilly’s wide-ranging product portfolio serving the Do-it-Yourself (DIY) and Do-it-for-Me (DIFM) customers provides the company a competitive edge and is anticipated to have fueled its comparable store sales growth during the third quarter. This, in turn, is likely to have buoyed O’Reilly’s top line during the July-September period.

Further, the company is likely to have gained from the opening of new stores and distribution centers in the profitable regions during the to-be-reported quarter. The Zacks Consensus Estimate for the number of stores at the end of the third quarter is pegged at 5,762, calling for a rise from the 5,613 and 5,732 recorded in the year-ago period and the prior quarter, respectively.

Also, O’Reilly’s customer-centric business model and surging demand for technologically-advanced auto parts are likely to have boosted the firm’s sales during the September-end quarter.

However, rising operating expenses amid the increasing selling, general and distribution (SG&A) expenses, on account of the opening of new stores, distribution centers and maintaining the existing ones, might have dented O’Reilly’s cash flows and overall margins during the quarter. Apart from this, O’Reilly’s plan to pursue omni-channel goals is likely to have inflated the expenses even more, thereby further clipping its profit margins during the quarter under review.

Stocks With Favorable Combinations

Here are a few companies in the auto space that you may want to consider, as our model shows that these have the right combination to post an earnings beat in the upcoming releases:

Penske Automotive (PAG - Free Report) has an Earnings ESP of +9.29% and currently carries a Zacks Rank #2. The company is set to report third-quarter 2021 earnings on Oct 27.

Sonic Automotive (SAH - Free Report) has an Earnings ESP of +5.51% and holds a Zacks Rank of 2, at present. The company will release quarterly figures on Oct 28.

Group 1 Automotive (GPI - Free Report) has an Earnings ESP of +2.78% and carries a Zacks Rank #2, currently. The company’s third-quarter 2021 results are scheduled to be out on Oct 28.