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Why Is O'Reilly Automotive (ORLY) Up 0.5% Since Last Earnings Report?
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A month has gone by since the last earnings report for O'Reilly Automotive (ORLY - Free Report) . Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is O'Reilly Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
O’Reilly Q2 Earnings Beat Estimates
O’Reilly reported second-quarter 2026 earnings of 86 cents per share, up 10.3% year over year. The figure beat the Zacks Consensus
Estimate of 85 cents by 1.2%. Revenues increased 8.1% to $4.89 billion and surpassed the consensus mark of $4.86 billion by 0.8%.
Comparable store sales rose 6%, supported by solid growth across the professional service provider and do-it-yourself channels. The company also benefited from an expanding store network and a lower share count.
Comps Gain Extends Sales Momentum
Second-quarter comparable store sales growth accelerated from 4.1% in the year-ago period. The metric includes sales from U.S. stores open for at least one year, along with eligible ship-to-home and pickup-in-store online orders.
For the first six months of 2026, comparable store sales increased 7% compared with 3.9% a year earlier. Total first-half revenues advanced 9.1% to $9.45 billion, reflecting sustained demand across O’Reilly’s core customer groups.
Pro Channel Leads the Mix
Sales to professional service provider customers increased 12.5% year over year to $2.47 billion. The channel accounted for slightly more than half of quarterly revenues and outpaced growth in the do-it-yourself business.
DIY sales rose 4.9% to $2.34 billion. Other sales and sales adjustments totaled $85.6 million, down from $100.7 million in the prior-year quarter. The results highlight the continued momentum of O’Reilly’s dual-market strategy.
Margins Hold as Costs Rise
Gross profit increased 8.2% to $2.52 billion. Gross margin remained unchanged at 51.4%, indicating that the company preserved product profitability while supporting higher sales volumes.
Selling, general and administrative expenses rose 8.4% to $1.53 billion. These costs represented 31.3% of sales compared with 31.2% a year ago. Operating income advanced 7.8% to $985.7 million, while operating margin held steady at 20.2%.
Growth Reflected in Cash Flow
Net income increased 7% to $715.1 million, although net margin declined to 14.6% from 14.8%. Interest expense rose to $69.9 million from $57.3 million, partially offsetting the benefit of higher operating profit.
Second-quarter operating cash flow increased 33% to $1.01 billion. Capital expenditures totaled $307.6 million, while free cash flow climbed 54.4% to $692.7 million. For the first six months, operating cash flow reached $2.04 billion and free cash flow totaled $1.48 billion.
Stores Expansion and Capital Returns
O’Reilly opened 51 stores during the quarter, including 46 domestic locations and five stores in Mexico. The company ended June with 6,695 stores across the United States, Puerto Rico, Mexico and Canada. Year-to-date net new openings totaled 110.
ORLY repurchased 16.7 million shares during the quarter for $1.51 billion at an average price of $90.40. First-half repurchases totaled $2.43 billion. The lower diluted share count of 829 million, down from 858 million, helped earnings per share grow faster than net income.
Balance Sheet Reflects Investment
As of June 30, 2026, ORLY’s cash and cash equivalents totaled $262.2 million, up from $198.6 million as of June 30, 2025. Inventory increased 10.6% to $5.97 billion as the company supported a larger store base and maintained parts availability.
Long-term debt rose to $7.01 billion from $5.82 billion. Accounts payable increased to $7.38 billion from $6.86 billion, while the accounts-payable-to-inventory ratio declined to 123.7% from 127%. Adjusted debt to EBITDAR increased to 2.17 from 2.06.
Raised Key 2026 Targets
O’Reilly raised its 2026 comparable store sales guidance to 4-6% from the previous estimate of 3-5%. Total revenues are now projected between $18.9 billion and $19.2 billion, up from the prior outlook of $18.7-$19 billion. Diluted earnings are expected in the range of $3.20-$3.30 per share, up from the previous outlook of $3.15 to $3.25.
The company continues to target 225-235 net new store openings. Gross margin is projected at 51.5-52%, with operating margin expected between 19.3% and 19.8%. Operating cash flow is forecast at $3.1-$3.5 billion, and free cash flow is anticipated between $1.8 billion and $2.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, O'Reilly Automotive has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, O'Reilly Automotive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
O'Reilly Automotive is part of the Zacks Automotive - Retail and Wholesale - Parts industry. Over the past month, Genuine Parts (GPC - Free Report) , a stock from the same industry, has gained 9.5%. The company reported its results for the quarter ended June 2026 more than a month ago.
Genuine Parts reported revenues of $6.54 billion in the last reported quarter, representing a year-over-year change of +6%. EPS of $2.15 for the same period compares with $2.10 a year ago.
Genuine Parts is expected to post earnings of $2.10 per share for the current quarter, representing a year-over-year change of +6.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Genuine Parts. Also, the stock has a VGM Score of B.
View the Zacks #1 Rank List
Image: Bigstock
Why Is O'Reilly Automotive (ORLY) Up 0.5% Since Last Earnings Report?
A month has gone by since the last earnings report for O'Reilly Automotive (ORLY - Free Report) . Shares have added about 0.5% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is O'Reilly Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
O’Reilly Q2 Earnings Beat Estimates
O’Reilly reported second-quarter 2026 earnings of 86 cents per share, up 10.3% year over year. The figure beat the Zacks Consensus
Estimate of 85 cents by 1.2%. Revenues increased 8.1% to $4.89 billion and surpassed the consensus mark of $4.86 billion by 0.8%.
Comparable store sales rose 6%, supported by solid growth across the professional service provider and do-it-yourself channels. The company also benefited from an expanding store network and a lower share count.
Comps Gain Extends Sales Momentum
Second-quarter comparable store sales growth accelerated from 4.1% in the year-ago period. The metric includes sales from U.S. stores open for at least one year, along with eligible ship-to-home and pickup-in-store online orders.
For the first six months of 2026, comparable store sales increased 7% compared with 3.9% a year earlier. Total first-half revenues advanced 9.1% to $9.45 billion, reflecting sustained demand across O’Reilly’s core customer groups.
Pro Channel Leads the Mix
Sales to professional service provider customers increased 12.5% year over year to $2.47 billion. The channel accounted for slightly more than half of quarterly revenues and outpaced growth in the do-it-yourself business.
DIY sales rose 4.9% to $2.34 billion. Other sales and sales adjustments totaled $85.6 million, down from $100.7 million in the prior-year quarter. The results highlight the continued momentum of O’Reilly’s dual-market strategy.
Margins Hold as Costs Rise
Gross profit increased 8.2% to $2.52 billion. Gross margin remained unchanged at 51.4%, indicating that the company preserved product profitability while supporting higher sales volumes.
Selling, general and administrative expenses rose 8.4% to $1.53 billion. These costs represented 31.3% of sales compared with 31.2% a year ago. Operating income advanced 7.8% to $985.7 million, while operating margin held steady at 20.2%.
Growth Reflected in Cash Flow
Net income increased 7% to $715.1 million, although net margin declined to 14.6% from 14.8%. Interest expense rose to $69.9 million from $57.3 million, partially offsetting the benefit of higher operating profit.
Second-quarter operating cash flow increased 33% to $1.01 billion. Capital expenditures totaled $307.6 million, while free cash flow climbed 54.4% to $692.7 million. For the first six months, operating cash flow reached $2.04 billion and free cash flow totaled $1.48 billion.
Stores Expansion and Capital Returns
O’Reilly opened 51 stores during the quarter, including 46 domestic locations and five stores in Mexico. The company ended June with 6,695 stores across the United States, Puerto Rico, Mexico and Canada. Year-to-date net new openings totaled 110.
ORLY repurchased 16.7 million shares during the quarter for $1.51 billion at an average price of $90.40. First-half repurchases totaled $2.43 billion. The lower diluted share count of 829 million, down from 858 million, helped earnings per share grow faster than net income.
Balance Sheet Reflects Investment
As of June 30, 2026, ORLY’s cash and cash equivalents totaled $262.2 million, up from $198.6 million as of June 30, 2025. Inventory increased 10.6% to $5.97 billion as the company supported a larger store base and maintained parts availability.
Long-term debt rose to $7.01 billion from $5.82 billion. Accounts payable increased to $7.38 billion from $6.86 billion, while the accounts-payable-to-inventory ratio declined to 123.7% from 127%. Adjusted debt to EBITDAR increased to 2.17 from 2.06.
Raised Key 2026 Targets
O’Reilly raised its 2026 comparable store sales guidance to 4-6% from the previous estimate of 3-5%. Total revenues are now projected between $18.9 billion and $19.2 billion, up from the prior outlook of $18.7-$19 billion. Diluted earnings are expected in the range of $3.20-$3.30 per share, up from the previous outlook of $3.15 to $3.25.
The company continues to target 225-235 net new store openings. Gross margin is projected at 51.5-52%, with operating margin expected between 19.3% and 19.8%. Operating cash flow is forecast at $3.1-$3.5 billion, and free cash flow is anticipated between $1.8 billion and $2.1 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month.
VGM Scores
At this time, O'Reilly Automotive has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for value investors.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Interestingly, O'Reilly Automotive has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
O'Reilly Automotive is part of the Zacks Automotive - Retail and Wholesale - Parts industry. Over the past month, Genuine Parts (GPC - Free Report) , a stock from the same industry, has gained 9.5%. The company reported its results for the quarter ended June 2026 more than a month ago.
Genuine Parts reported revenues of $6.54 billion in the last reported quarter, representing a year-over-year change of +6%. EPS of $2.15 for the same period compares with $2.10 a year ago.
Genuine Parts is expected to post earnings of $2.10 per share for the current quarter, representing a year-over-year change of +6.1%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.9%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Genuine Parts. Also, the stock has a VGM Score of B.