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O'Reilly's (NASDAQ:ORLY) Q1 Earnings Results: Revenue In Line With Expectations

StockStory - Wed Apr 24, 3:37PM CDT

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Auto parts and accessories retailer O’Reilly Automotive (NASDAQ:ORLY) reported results in line with analysts' expectations in Q1 CY2024, with revenue down 7.2% year on year to $3.98 billion. The company's outlook for the full year was also close to analysts' estimates with revenue guided to $16.95 billion at the midpoint. It made a GAAP profit of $9.20 per share, improving from its profit of $8.28 per share in the same quarter last year.

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O'Reilly (ORLY) Q1 CY2024 Highlights:

  • Revenue: $3.98 billion vs analyst estimates of $3.98 billion (small miss)
  • EPS: $9.20 vs analyst expectations of $9.30 (1.1% miss)
  • The company reconfirmed its revenue guidance for the full year of $16.95 billion at the midpoint
  • The company raised its EPS guidance for the full year of $41.60 at the midpoint (from $41.30, expectations are for $42.48)
  • Gross Margin (GAAP): 51.2%, in line with the same quarter last year
  • Free Cash Flow of $438.9 million, similar to the same quarter last year
  • Same-Store Sales were up 3.4% year on year (miss vs. expectations of up 4.1% year on year)
  • Store Locations: 6,217 at quarter end, increasing by 188 over the last 12 months
  • Market Capitalization: $64.48 billion

Serving both the DIY customer and professional mechanic, O’Reilly Automotive (NASDAQ:ORLY) is an auto parts and accessories retailer that sells everything from fuel pumps to car air fresheners to mufflers.

Auto Parts Retailer

Cars are complex machines that need maintenance and occasional repairs, and auto parts retailers cater to the professional mechanic as well as the do-it-yourself (DIY) fixer. Work on cars may entail replacing fluids, parts, or accessories, and these stores have the parts and accessories or these jobs. While e-commerce competition presents a risk, these stores have a leg up due to the combination of broad and deep selection as well as expertise provided by sales associates. Another change on the horizon could be the increasing penetration of electric vehicles.

Sales Growth

O'Reilly is larger than most consumer retail companies and benefits from economies of scale, giving it an edge over its competitors.

As you can see below, the company's annualized revenue growth rate of 10.7% over the last five years was decent as it opened new stores and grew sales at existing, established stores.

O'Reilly Total Revenue

This quarter, O'Reilly's revenue grew 7.2% year on year to $3.98 billion, missing Wall Street's expectations. Looking ahead, Wall Street expects sales to grow 6.8% over the next 12 months, a deceleration from this quarter.

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Same-Store Sales

O'Reilly's demand within its existing stores has generally risen over the last two years but lagged behind the broader consumer retail sector. On average, the company's same-store sales have grown by 7% year on year. With positive same-store sales growth amid an increasing physical footprint of stores, O'Reilly is reaching more customers and growing sales.

O'Reilly Year On Year Same Store Sales Growth

In the latest quarter, O'Reilly's same-store sales rose 3.4% year on year. By the company's standards, this growth was a meaningful deceleration from the 10.8% year-on-year increase it posted 12 months ago. We'll be watching O'Reilly closely to see if it can reaccelerate growth.

Key Takeaways from O'Reilly's Q1 Results

We struggled to find many strong positives in these results. Same store sales missed, leading to a revenue miss. While gross margin was roughly in line with expectations, EPS missed. Additionally, the company's full-year earnings forecast was underwhelming. Overall, the results could have been better. The company is down 3.3% on the results and currently trades at $1,054.85 per share.

O'Reilly may have had a tough quarter, but does that actually create an opportunity to invest right now? When making that decision, it's important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it's free.

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