O’Reilly Automotive Inc. ORLY reported earnings per share of $3.97 in first-quarter 2020, surpassing the Zacks Consensus Estimate of $3.86. However, the bottom line compared unfavorably with $4.05 a share recorded in the prior-year quarter. O’Reilly’s quarterly revenues came in at $2,476.5 million, topping the consensus mark of $2,426 million. Moreover, the top line was higher than the prior-year level of $2,410.6 million.
O'Reilly Automotive, Inc. Price, Consensus and EPS Surprise
O'Reilly Automotive, Inc. price-consensus-eps-surprise-chart | O'Reilly Automotive, Inc. Quote
Net income amounted to $300.4 million in the quarter, down 6% year over year. The auto parts retailer’s comparable store sales declined 1.9% year over year in the quarter under review against a 3.2% rise in the comparable year-ago period. The metric was estimated to grow in the range of 2-4%. Coronavirus jitters and stay-at-home orders in multiple states hit the firm hard in March, in turn resulting in comps decline.
Notably, SG&A expenses increased 5% to $872 million from $835 million in first-quarter 2019. Operating income declined 5% to $424 million from $445 million reported in the prior-year quarter.
During the reported quarter, O’Reilly repurchased 1.5 million shares for $574 million at an average price of $386.71 per share. The company currently has approximately $995 million remaining under the current share repurchase authorization. However, amid COVID-19-induced financial uncertainty, it has suspended the share buyback program. Further, the firm has withdrawn its annual guidance. In a bid to conserve cash, O’Reilly is implementing several cost-containment strategies including reduction of store operating hours and postponement of discretionary capital investments. To help serve customers effectively amid the coronavirus mayhem, it is undertaking several initiatives like curbside pickup for Buy Online and Pick Up In-Store orders, et al.
The company had cash and cash equivalents of $287 million as of Mar 31, 2020. Its long-term debt stands at $4,471 billion, representing a debt-to-capital ratio of 97.6%.
During the quarter under review, O’Reilly generated $459 million in cash from operating activities compared with $440.6 million in the comparable year-ago period. Capital expenditure amounted to $133.3 million compared with $152.9 million in the year-ago period. Free cash flow totaled $227.2 million compared with $279.2 million a year ago. New stores opened during the quarter totaled 76, bringing the total store count to 5,533 as of Mar 31, 2020.
Zacks Rank & Key Picks
O’Reilly currently carries a Zacks Rank #4 (Sell). On a year-to-date basis, shares of the company have declined around 15%.
Some better-ranked stocks in the auto space include Veoneer, Inc. VNE, Spartan Motors, Inc. SPAR and Unique Fabricating, Inc. UFAB, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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