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O'Reilly (ORLY) Q2 Earnings & Revenues Top Estimates, Up Y/Y

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O’Reilly Automotive Inc.’s (ORLY - Free Report) adjusted earnings per share came in at $4.28 in second-quarter 2018, a 38% surge from $3.10 in the prior-year quarter. The figure also beat the Zacks Consensus Estimate of $4.04.

During the reported quarter, net income improved 25% to $353 million (14.4% of sales) from $283 million (12.3% of sales) recorded in the year-ago period.

The company’s quarterly revenues rose 7% year over year to $2.46 billion. Moreover, the top line surpassed the Zacks Consensus Estimate of $2.43 billion.

O'Reilly Automotive, Inc. Price, Consensus and EPS Surprise

Gross profit went up 7% to $1.29 billion (or 52.5% of sales) from $1.20 billion (or 52.4% of sales) reported in the year-earlier quarter. Selling, general and administrative expenses rose 9% year over year to $809 million (33% of sales) from $743 million (32.4% of sales). Operating income increased 5% to $479 million (or 19.5% of sales) from $457 million (or 20% of sales) reported a year ago.

Store Information

During the second quarter, O’Reilly opened 54 stores and closed 4. Total store count was 5,147 as of Jun 30, 2018. Sales per weighted-average store increased to $476,000 from $463,000 in second-quarter 2017.

Share Repurchases

During the reported quarter, O’Reilly repurchased 1.6 million shares for $416 million, reflecting an average price of $264.38 per share. Subsequent to the end of the quarter, the company purchased additional 0.5 million shares for an investment of $132 million.

Since the company’s share-repurchase program inception in January 2011, O’Reilly has repurchased 70.5 million shares for $10.13 billion, indicating an average price of $143.76 per share.

Financial Position

O’Reilly reported cash and cash equivalents of $36.9 million at the end of the second quarter, up from $26.5 million at the end of the year-ago period. Its long-term debt increased to $3.25 billion as of June 30, 2018 compared with $2.61 billion as of June 30, 2017.

The company generated $875.2 million in cash from operating activities during the quarter under review compared with $710.5 million recorded in the prior-year period. Capital expenditures decreased to $109.3 million in the quarter under consideration from $116.9 million in the year-ago quarter. At the end of the quarter, its free cash flow also improved to $320.4 million from $207.8 million witnessed in the comparable quarter last year.


For third-quarter 2018, O’Reilly projects earnings per share of $4.2-$4.3. Further, the company expects consolidated comparable store sales to climb 2-4%.

For 2018, O’Reilly raised its earnings per share outlook to $15.7-$15.8 from $15.3-$15.4. However, it reiterated total revenue guidance of $9.4-$9.6 billion for the full year. Also, the company reaffirmed the consolidated comparable store-sales growth of 2-4% and gross margin view of 52.5-53%. Additionally, it confirmed the operating margin outlook of 18.5-19%.

Further, O’Reilly retained its capital expenditure range of $490-$520 million. Also, for 2018, the company kept its free cash flow view unchanged between $1.1 billion and $1.2 billion.

Zacks Rank & Other Key Picks

O’Reilly currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the auto space include Fox Factory Holding Corporation (FOXF - Free Report) , Oshkosh Corporation (OSK - Free Report) and AB Volvo (VLVLY - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Fox Factory has an expected long-term growth rate of 15.8%. Over a year, shares of the company have surged 30.2%.

Oshkosh has an expected long-term growth rate of 18.3%. Over a year, shares of the company have gained 5.3%.

Volvo has an expected long-term growth rate of 15%. The stock has risen 2.9% in the past year.

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