O'Reilly Boosts Share Repurchase - Analyst Blog


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O'Reilly Automotive Inc. ( ORLY ) revealed that its board of directors has approved a resolution that will enhance the authorization amount under its existing share repurchase program by $500 million, effective for a three-year period which began on November 12. With this, the aggregate authorization amount under the program has been increased to $3.0 billion.

Since the inception of the share repurchase program in January 2011 until October 25, O'Reilly has repurchased 30.1 million shares at an average price of $74.45, implying a total investment of $2.24 billion. During the third quarter of the year, the company has repurchased 6.4 million shares of its common stock at an average price of $84.76, implying a total investment of $539.0 million.

Subsequent to the end of the third quarter until October 25, the company has repurchased an additional 1.5 million shares for an average price of $83.49, implying a total investment of $128.0 million.

During the first nine months of the year, the company has repurchased 12.6 million shares at an average price of $89.62, leading to a total investment of $1.13 billion.

O'Reilly Automotive, a Zacks #2 Rank (Buy) stock, saw a 20% increase in earnings per share to $1.32 in the third quarter of 2012 from $1.10 in the same period last year. Quarterly earnings also surpassed the Zacks Consensus Estimate by 5 cents per share. Net income increased 7.3% to $159.3 million (9.9% of sales) from $148.4 million (9.7%) in the third quarter of 2011.

Revenues in the quarter rose 4.3% to $1.60 billion from $1.54 billion a year ago, marginally missing the Zacks Consensus Estimate of $1.62 billion. Comparable store sales (change in sales for stores open at least one year) stood at 1.3% compared with 4.8% in the third quarter of 2011.

Operating income improved 9.2% to $263.3 million from $241.0 million a year ago, while operating margin improved to 16.4% from 15.7% in the third quarter of 2011.

For the fourth quarter of the year, O'Reilly expects earnings per share of $1.03 to $1.07 and consolidated comparable store sales to increase in the range of 2% to 4%.

For full year 2012, the company anticipates earnings per share in the range of $4.64 to $4.68, up from the previous guidance of $4.56 to $4.66. It expects lower consolidated comparable store sales of 3%-4% compared with the prior guidance of 3%-5%.

O'Reilly lowered its revenue guidance to $6.15 billion-$6.20 billion from $6.15 billion-$6.25 billion. The company expects gross margin between 49.8% and 50.0% and operating margin between 15.5% and 15.8% for the year.

O'Reilly Automotive is the third largest specialty retailer of automotive aftermarket parts, tools, supplies, equipment, and accessories in the U.S., selling products to both Do-it-Yourself (DIY) customers and Do-it-for-Me (DIFM) or professional installers.

The company sells an extensive line of products consisting of new and remanufactured automotive hard parts (such as mufflers, brakes, and shock absorbers), maintenance items, accessories, a complete range of auto body paint and related materials, automotive tools and professional service equipment. Its main competitors are Advance Auto Parts Inc. ( AAP ) and AutoZone Inc. ( AZO ).

ADVANCE AUTO PT (AAP): Free Stock Analysis Report

AUTOZONE INC (AZO): Free Stock Analysis Report

O REILLY AUTO (ORLY): Free Stock Analysis Report

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

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