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What's in Store for O'Reilly Automotive (ORLY) in Q1 Earnings?

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O'Reilly Automotive Inc. (ORLY - Free Report) is set to release first-quarter 2019 earnings on Apr 24. In the last reported quarter, the specialty auto parts retailer delivered an earnings miss of 1.1%. In the trailing four quarters, it surpassed estimates thrice while missing once, the average beat being 2.5%.

In the past three months, shares of O'Reilly Automotive have underperformed the industry it belongs to. The stock has advanced 15.7% compared with 19.3% increase recorded by the industry during that period.

Let’s see, how things are shaping up for this announcement.

O'Reilly Automotive, Inc. Price and EPS Surprise


Factor to Consider

A solid start in 2019, along with growing demand for high-quality auto parts to improve life-span of vehicles, are expected to drive O’Reilly Automotive. In the soon-to-be-reported quarter, the company expects earnings of $3.92-$4.02 per share while consolidated comparable store sales are expected to rise 3-5%. Apart from offering quality products, its industry-leading customer service will support market share improvement in 2019.

However, increased complexity of auto parts have elevated prices across markets. This rise in prices of parts impelled DIY consumers to change their spending habits by neglecting basic maintenance and spend only on serious repairs. This drop in the sale of DIY auto parts is pressurizing O’Reilly Automotive’s same-store revenue growth.

Further, expenses to open stores and sustain existing ones are increasing the company’s overall expenses. Beside stores, its focus on in-store in omnichannel goals will mount variable costs, owing to the current inflationary environment and low unemployment rates.

The Zacks Consensus Estimate for the number of stores opened by the company in first-quarter 2019 is 76, which will lead to a total store count of 5,295.

Earnings Whispers

Our proven model does not conclusively predict that O’Reilly Automotive is likely to beat on earnings this quarter. This is because, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below.

Earnings ESP: O’Reilly Automotive has an Earnings ESP of +0.00% as both the Most Accurate Estimate and the Zacks Consensus Estimate are pegged at $4.06. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).

Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.

Stocks to Consider

Here are a few auto stocks worth considering, comprising the right combination of elements to deliver an earnings beat this time around:

BorgWarner Inc. (BWA - Free Report) has an Earnings ESP of +3.49% and it currently carries a Zacks Rank of 3. Its first-quarter 2019 results are scheduled to release on Apr 25.

You can see the complete list of today’s Zacks #1 Rank stocks here.

General Motors Company (GM - Free Report) has an Earnings ESP of +5.61% and it is a #3 Ranked player. Its first-quarter 2019 results are slated to release on Apr 30.

Cummins Inc. (CMI - Free Report) has an Earnings ESP of +2.02% and it currently carries a Zacks Rank of 3. Its first-quarter 2019 results are scheduled to release on Apr 30.

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