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O'Reilly (ORLY) Earnings & Revenues Lag Estimates in Q1

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O’Reilly Automotive Inc.’s (ORLY - Free Report) adjusted earnings per share were $4.05 in first-quarter 2019, marking 12% rise from $3.61 in the prior-year quarter. However, the figure missed the Zacks Consensus Estimate of $4.06.

During the reported quarter, net income improved 5% to $321 million (13.3% of sales) from $305 million (13.4% of sales) recorded in the year-ago period.

The company’s quarterly revenues rose 6% year over year to $2.41 billion, missing the Zacks Consensus Estimate of $2.44 billion. O’Reilly’s comparable store sales increased 3.2% from 3.4% recorded in the prior-year quarter.

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

 

Gross profit went up 6% to $1.28 billion (or 53.1% of sales) from $1.2 billion (or 52.6% of sales) reported in the year-ago quarter. Selling, general and administrative expenses rose 7% year over year to $835 million (34.6% of sales) from $778 million (34.1% of sales) in first-quarter 2018. Operating income increased 5% to $445 million (or 18.5% of sales) from $423 million (or 18.5% of sales) reported a year ago.

Store Information

O’Reilly opened 64 stores in first-quarter 2019. The total store count was 5,306 as of Mar 31, 2019, compared with 5,097 in the last year. Sales per weighted-average store increased to $452,000 from $447,000 in the prior-year quarter.

Share Repurchases

During the reported quarter, O’Reilly repurchased 0.9 million shares for $322 million, reflecting average price of $347.09 per share. From the end of the first quarter to the date of the earnings release, the company did not repurchase any additional shares.

Financial Position

O’Reilly reported cash and cash equivalents of $56.7 million at the end of the first quarter, up from $38.5 million at the end of the year-ago period. Its long-term debt increased to $3.5 billion as of Mar 31, 2019, from $3.2 billion as of Mar 31, 2018.

At the end of the first quarter, O’Reilly generated $440.6 million in cash from operating activities compared with $432 million recorded in the same period of 2018. During the period, capital expenditure was $153 million compared with $115 million in the year-ago period. Further, free cash flow declined to $279.2 million from $311 million witnessed in the last year.

Outlook

For second-quarter 2019, O’Reilly projects earnings of $4.55-$4.65 per share. Further, the company expects 3-5% rise in consolidated comparable store sales.

For 2019, O’Reilly reiterated total revenues projection of $10-$10.3 billion and earnings per share of $17.37-$17.47.

Additional News

During the first quarter of 2019, the Springfield, MO-based company announced that it purchased a 580,000-square-foot building in the north of Mississippi. The new location will be used as distribution center project, supporting O’Reilly to offer improved service across the Memphis area markets.

Zacks Rank & Stocks to Consider

O’Reilly currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader auto sector are AB Volvo (VLVLY - Free Report) , PACCAR Inc. (PCAR - Free Report) and Fox Factory Holding Corporation (FOXF - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Volvo has an expected long-term growth rate of 5%. The stock has gained 16.7% in the past three months.

PACCAR has an expected long-term growth rate of 8.4%. The stock has gained 14% in the past three months.

Fox Factory has an expected long-term growth rate of 15.1%. Over the past three months, shares of the company have gained 27.9%.

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