Is O'Reilly Automotive (ORLY) Poised to Beat Q2 Earnings? - Analyst Blog


We expect O'Reilly Automotive Inc. ( ORLY ) to beat expectations when it reports second-quarter 2014 results on Jul 23, 2014. Last quarter, it posted a surprise of +1.90%. Let us see how things are shaping up for this announcement.

Why a Likely Positive Surprise?

Our proven model shows that O'Reilly Automotive is likely to beat earnings this quarter because it has the right combination of two key components.

Positive Zacks ESP: Earnings ESP , which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is poised at +0.54%. A favorable Zacks ESP serves as a meaningful and leading indicator of a likely positive earnings surprise.

Zacks Rank #3 (Hold): Note that stocks with Zacks Ranks of #1, 2 and 3 have a significantly higher chance of beating earnings. However, the Sell-rated stocks (#4 and 5) should never be considered going into an earnings announcement.

The combination of O'Reilly Automotive's Zacks Rank #3 and +0.54% ESP makes us confident of an earnings beat.

What is Driving the Better-Than-Expected Earnings?

O'Reilly enjoys a competitive edge owing to its dual market strategy. Also, the company is continuously benefiting from a strong distribution network. The company aggressively pursues new store openings for greater penetration in existing markets and expansion into new, contiguous markets. For full-year 2014, O'Reilly raised the earnings per share guidance to $6.82-$6.92, based on good operating performance and announcement of an additional share repurchase program.

The positive trend has been seen in the trailing four quarters, over which O'Reilly posted an average surprise of 4.11%. This favorable development can be attributed to O'Reilly's efforts to increase revenues and expand business.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter:

Gentex Corp. ( GNTX ), which has an Earnings ESP of +2.08% and a Zacks Rank #1 (Strong Buy), will be reporting its second-quarter 2014 numbers on Jul 24, 2014.

Meritor, Inc. ( MTOR ) has an Earnings ESP of +6.67% and a Zacks Rank #1. The company will be releasing its second-quarter financial results on Jul 31, 2014.

Dana Holding Corp. ( DAN ) has an earnings ESP of +5.77% and a Zacks Rank #2 (Buy). The company will release its second-quarter financial results on Jul 24, 2014.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

O REILLY AUTO (ORLY): Free Stock Analysis Report

MERITOR INC (MTOR): Free Stock Analysis Report

GENTEX CORP (GNTX): Free Stock Analysis Report

DANA HOLDING CP (DAN): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: ORLY , MTOR , GNTX , DAN

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