O'Reilly (ORLY) Q3 Earnings Beat Estimates, Revenues In Line
O’Reilly Automotive Inc. ORLY reported adjusted earnings of $3.22 per share in the third quarter of 2017, beating the Zacks Consensus Estimate of $3.15. Net income improved 2% to $284 million (12.1% of sales) from $278 million (12.5% of sales) in the third quarter of 2016.
Despite challenging weather conditions in different parts of the country, quarterly revenues went up 5.4% to $2.34 billion from $2.22 billion a year ago. Revenues were almost on par with the Zacks Consensus Estimate. Comparable store sales inched up 1.8% in the reported quarter compared with a 4.8% rise in the prior-year quarter.
Gross profit rose 5% to $1.23 billion (52.6% of sales) from $1.17 billion (52.7% of sales) a year ago. Selling, general and administrative expenses increased 6% year over year to $768 million (32.8% of sales) from $722 million (32.5% of sales). Operating income grew 3% to $462 million (or 19.7% of sales) from $448 million (or 20.2% of sales) a year ago.
O'Reilly Automotive, Inc. Price, Consensus and EPS Surprise
O'Reilly Automotive, Inc. Price, Consensus and EPS Surprise | O'Reilly Automotive, Inc. Quote
Store Information
During the third quarter of 2017, O’Reilly opened 52 stores across the country and closed down two. Total store count was 4,984 as of Sep 30, 2017. Sales per weighted-average store decreased to $469,000 from $471,000 in the third quarter of 2016.
Share Repurchases
During the third quarter of 2017, O’Reilly repurchased 2.7 million shares for $551 million, reflecting an average price of $200.7 per share.
Since the inception of the share repurchase program in January 2011, O’Reilly repurchased total of 65.3 million shares for $8.81 billion, indicating an average price of $135.01 per share.
Financial Position
O’Reilly had cash and cash equivalents of $37.3 million as of Sep 30, 2017 compared with $560.3 million as of Sep 30, 2016. Long-term debt was $2.9 billion as of Sep 30, 2017 compared with $1.89 billion as of Sep 30, 2016.
In the last nine months of fiscal 2017, net cash flow from operations decreased to $1.09 billion from $1.21 billion a year ago. Also in the same period, capital expenditures decreased to $347.8 million from $356.2 million. As of Sep 30, 2017, free cash flow to the firm was $704.4 million compared with $812 million from the year-ago period.
Guidance
For the fourth quarter of 2017, O’Reilly projects diluted earnings per share in the range of $2.65-$2.75. The company expects consolidated comparable store sales to inch up 0-2%.
For full-year 2017, the company expects earnings per share in the band of $11.82-$11.92, up from the previous guidance of $11.77-$11.87.
O’Reilly projects a consolidated comparable store sales increase in the range of 1-2% during the year. The company anticipates revenues in the band of $8.9-$9 billion compared with the previous expectation of $8.9-$9.1 billion. For 2017, the gross margin view lies in the range of 52.5-52.7% and operating margin is projected to be 19-19.4% compared with the previous estimate of 19.1-19.5%.
O’Reilly reiterated its capital expenditure to be within the range of $470-$500 million. Also, for 2017, it expects free cash flow to be between $830 million and $880 million.
Zacks Rank & Key Picks
O’Reilly currently carries a Zacks Rank #3 (Hold).
Some better-ranked companies in the auto space include Autoliv, Inc. ALV, BorgWarner Inc. BWA and Cummins Inc. CMI. All stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Autoliv has an expected long-term growth rate of 8.7%.
BorgWarner has an expected long-term growth rate of 8.9%.
Cummins has an expected long-term growth rate of 12%.
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