Rich Duprey
4 min read
Quick Read
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ORLY has posted four consecutive quarters of double-digit professional comps, yet the stock has fallen 8.5% over the past year despite strong fundamentals.
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A rumored ~$10 billion bid for GPC’s NAPA unit has raised balance sheet fears, though CEO Beckham said O’Reilly has no intention of a large transformative acquisition.
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Investors are watching O’Reilly Automotive (NASDAQ:ORLY) ahead of its third-quarter results on Oct. 28. Professional demand carried the first half. Even so, shares are down 1.41% year to date while talk of a rumored $10 billion acquisition hangs over the stock.
Double-Digit Pro Comps Meet a Stalled Stock
Last quarter, O’Reilly reported EPS of $0.86 on revenue of $4.89 billion, up 8.1% year over year, and inched past both estimates. Comparable store sales rose 6.0%. Professional comps grew right at 10%, which made it the fourth consecutive quarter of double-digit gains.
DIY was softer. Comps rose in the low single digits, while transaction counts fell, partly because hot-weather categories were weak. Free cash flow jumped 51.9% to $692.7 million.
The company raised full-year comp guidance to 4% to 6% from 3% to 5% and increased EPS guidance to $3.20 to $3.30. The stock closed at $89.92 on Oct. 23. That leaves it 8.5% lower over the past year despite a 4.68% gain in the last month.
Wall Street Expects High-Single-Digit EPS Growth
Pro Growth, Fading Inflation, and the NAPA Question
Professional sales will be the first metric to watch. They reached $2.47 billion in Q2, and the year-ago Q3 base is $2.31 billion. Double-digit pro comps against that base would be the clearest sign that O’Reilly is still taking share.
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Pricing gets harder from here. Same-SKU inflation ran 5.5% in Q2. Management expects it to ease to 1% to 2% in the back half, with Q3 at the top end, as the company laps last year’s tariff-driven price increases. Management already noted uneven comparisons against last year’s 5.6% comp.
