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O'Reilly (ORLY) Misses on Q2 Earnings & Sales, Revises View

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O’Reilly Automotive, Inc. (ORLY - Free Report) reported second-quarter 2022 adjusted earnings per share of $8.78, missing the Zacks Consensus Estimate of $8.98. Lower-than-expected comps growth resulted in the underperformance. Comps grew 4.3% for the reported quarter but missed the Zacks Consensus Estimate of 5.29%.The bottom line, however, increased 5.4% from $8.33 recorded in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $3,670.7 million, missing the consensus mark of $3,696 million. The top line, however, was nearly 6% higher than the prior-year figure of $3,465.6 million.

During the quarter, the company opened 62 new stores in the United States. It did not open any new stores in Mexico. The total store count was 5,900 as of Jun 30, 2022.

Financials, Share Repurchase & Costs

In the reported quarter, selling, general and administrative expenses flared up 5% year over year to $1,086.2 million. Operating income marginally inched up 0.4% to $799 million from $796 million. Net income amounted to $576.8 million, down 1.5% from $585.4 million in the year-ago quarter.

During the reported quarter, O’Reilly repurchased 2.2 million shares of its common stock for a total investment of $1.38 billion at an average price of $620.27 per share. As of Jul 27,, the company had nearly $1.09 billion remaining under the current share-repurchase authorization.

It had cash and cash equivalents of $253.9 million at the end of the reported quarter, sharply falling from $631.6 million in the year-ago quarter. Its long-term debt was $4,669.8 million, higher than the year-ago level of $3,825.2 million.

During the reported quarter, O’Reilly generated $702.1 million in cash from operating activities, down from the year-ago period’s $822.2 million. Capital expenditure totaled $124.9 million, down from $127.7 million in the year-ago period. Free cash flow fell 15.8% to $573.8 million.

Outlook for 2022

For 2022, ORLY’s estimates have been revised. Total revenue projections are now expected within the range of $14-$14.3 billion, down from the earlier view of $14.2-$14.5 billion. Earnings per share are pegged within $31.25-$31.75, down from the previous band of $32.35-$32.85. Forecasts for comparable store sales growth have been brought down to the range of 3-5% from the previous band of 5-7%. Free cash flow remains unchanged in the band of $1.3-$1.6 billion. Capital expenditures also remain unchanged within $650-$750 million.,

Zacks Rank & Key Picks

ORLY carries a Zacks Rank #3 (Hold), currently.

Better-ranked players in the auto space include American Axle & Manufacturing Holdings (AXL - Free Report) , LCI Industries (LCII - Free Report) and Standard Motor Products (SMP - Free Report) , each carrying a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

American Axle has an expected earnings growth rate of 80.7% for 2023. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

American Axle’s earnings beat the Zacks Consensus Estimate in three of the trailing four quarters. AXL pulled off a trailing four-quarter earnings surprise of 847.92%, on average. The stock has declined 10.7% over the past year.

LCI Industries has an expected earnings growth rate of 65.9% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

LCI Industries’ earnings beat the Zacks Consensus Estimate in three of the trailing four quarters and missed in one. LCII pulled off a trailing four-quarter earnings surprise of 21.81%, on average. The stock has declined 13.5% in the past year.

Standard Motor has an expected earnings growth rate of 5.2% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant in the past 30 days.

Standard Motor’s earnings beat the Zacks Consensus Estimate in all the trailing four quarters. SMP pulled off a trailing four-quarter earnings surprise of 40.34%, on average. The stock has risen 7.8% over the past year.