O’Reilly Automotive, Inc. (ORLY) just hit a new all-time high at $50.09 after jumping higher in late April on a 20% Q1 earnings surprise. Estimates are on rising for this Zacks #1 rank stock, with the next year projecting 15% earnings growth.
Company Description
O’Reilly Automotive, Inc. operates as a specialty retailer of automotive aftermarket parts, tools and supplies in the united States. The company was founded in 1957, operates over 3,500 stores and has a market cap of $6.71 billion.
Even though new-car sales have been relatively strong for the last year on renewed consumer spending and support from the government, plenty of car owners are still choosing to skip the extra expense and upgrade older models. This trend help O’Reilly deliver much better than expected Q1 results on April 28 that included a solid 20% earnings surprise.
First-Quarter Results
Revenue for the period was up 10% from last year to $1.16 billion, with same-store sales up 6.9%. Earnings also looked good, coming in at 70 cents, 19% ahead of the Zacks Consensus Estimate. O’Reilly now has an average earnings surprise of 11% over the last four quarters.
O’Reilly also did a good job of controlling its costs and expenses, with gross margin expanding to 48.3% of sales from 46.6% last year and SG&A expenses improving to 35% of sales from 36.9% last year. Operating margin improved 340 basis points to 13.2% of sales.
The company also added that it had opened 49 new stores during the quarter, putting it on pace to hit its goal of opening 150 new stores in 2010.
Balance Sheet
O’Reilly moved to strengthen its balance sheet during the quarter too, reducing it total borrowings by $88 million to $703 million. Its cash position stands at $30 million, in line last year.
Estimates
Estimates nudged a bit higher on the good quarter, with the current year adding 18 cents to $2.77. The next year added 25 cents to $3.18, a solid 15% growth projection.
In spite of the recent gains, this stock still has value, trading with a forward P/E of 17.6X, a discount to its peer’s 19.4X.
The Chart
Shares of ORLY jumped higher on the good quarter to hit a new all-time high before pulling back a bit on profit taking and general market weakness. As it stands, shares are back within striking distance of the high, take a look below.
Michael Vodicka is the Momentum Stock Strategist for Zacks.com. He is also the Editor in charge of the market-beating Zacks Surprise Trader Service. Zacks Investment Research
