ORLY continues to bleed cash; cheats on depreciation?
ORLY's "earnings" are an illusion. Look at the cash flow statement. Cash flow from operations is down 30% YoY! Capex is enormous (regularly more than 2x depreciation), free cash flow is hugely negative, and debt continues to go up. The only reason the company is able to beat EPS estimates is because it under-depreciates. At some point, this will catch up with them and they will take a huge write-off. Meanwhile, management would have sold most of their stock to unsuspecting investors. This is a $20 stock at best. AZO is much better value at 12x FCF and buying back stock.
I agree, ORLY is spending 250 million dollars in California alone with a new DC off an incredibly congested freeway in Moreno Valley, conversion of stores, and loss from product pulls. Where does the bleeding end? Labor is of no concern as upper management is spending tens of millions in overtime and lunch violation penalties for California managers. Another OT/break lawsuit is pending.
Over the last 12 months, the company has declared more than $200Mn in "profits", while at the same time burned more than $200Mn in cash. There is no other company where I have seen such a disconnect between profits and cash generated - and I have looked at hundreds of companies.