O'Reilly Automotive Inc. ( ORLY ) posted a 26% increase in earnings to $1.76 per share in the fourth quarter of 2014 from $1.40 in the year-ago quarter. Earnings also surpassed the Zacks Consensus Estimate of $1.67. Net income improved 19% to $182 million (10.3% of sales) from $152 million (9.4% of sales) in the fourth quarter of 2013.
Quarterly revenues scaled up 9% to $1.76 billion from $1.62 billion in the same period a year ago. Revenues also surpassed the Zacks Consensus Estimate of $1.74 billion. Comparable store sales increased 6.3% in the reported quarter, compared with a 5.4% rise in the year-ago comparable quarter.
Gross profit ascended 11% to $912 million (51.7% of sales) from $819 million (50.5% of sales) a year ago. Selling, general and administrative expenses rose 8% to $609 million (34.5% of sales) from $564 million (34.8% of sales) in the year-ago quarter. Operating income increased 18% to $303 million (17.2% of sales) from $256 million (15.8% of sales) in the same period last year.
Earnings for full-year 2014 increased 22% to $7.34 per share from $6.03 in 2013 and surpassed the Zacks Consensus Estimate of $7.25. Revenues for 2014 increased 9% to $7.22 billion from $6.65 billion in 2013, marginally surpassing the Zacks Consensus Estimate of $7.19 billion.
During 2014, O'Reilly opened 207 new stores. During the fourth quarter, the company opened 57 stores. Also, it plans to open a total of 205 stores in 2015.
The total store count across 43 states stood at 4,366 as of Dec 31, 2014. Sales per weighted average-store increased to $403,000 in fourth-quarter 2014 from $387,000 a year ago.
During the quarter under review, O'Reilly repurchased 1.2 million shares for $179 million, reflecting an average price of $152.05. As of Dec 31, 2014, the company repurchased 5.7 million shares for $866 million, translating into an average price of $150.86. Subsequent to the end of the fourth quarter and through Feb 4, 2015, the company repurchased an additional 0.1 million shares for $9 million, implying an average price of $183.2.
Since the inception of the share repurchase program in Jan 2011, O'Reilly has repurchased a total of 46.4 million shares for $4.23 billion, indicating an average price of $91.16.
On Feb 4, 2015, O'Reilly also announced that its board of directors has authorized the repurchase of an additional $500 million worth of shares. Thus, the company now has aggregate share repurchase authorization of $5 billion. This additional $500 million authorization is effective for a three-year period, effective Feb 4, 2015.
As of Feb 4, 2015, the company had approximately $770 million worth of share repurchase authorization left under its repurchase program.
O'Reilly had cash and cash equivalents of $250.6 million as of Dec 31, 2014, up from $231.3 million as of Dec 31, 2013. Long-term debt was $1.4 billion as of Dec 31, 2014, on par with that of Dec 31, 2013.
In 2014, net cash flow from operations increased to $1.2 billion from $908 million in the prior-year period. Meanwhile, capital expenditures increased to $430 million from $395.9 million in 2013.
For first-quarter 2015, O'Reilly projects earnings per share in the range of $1.89-$1.93. The company expects consolidated comparable store sales to increase by 3%-5%.
For full-year 2015, O'Reilly expects earnings per share in the range of $8.20 to $8.30. Meanwhile, it expects consolidated comparable store sales to increase 3%-5%. The company's revenue guidance for 2015 is $7.6-$7.8 billion and gross margin guidance is 51.8%-52.2%. Its operating margin guidance is 18.1%-18.5%.
O'Reilly expects capital expenditures in the range of $400-$430 million in 2015. Free cash flow is expected between $675 million and $725 million.
O'Reilly is a prominent player in the automotive replacement parts and accessories industry. The company currently carries a Zacks Rank #2 (Buy).
Other well-ranked automobile stocks include CarMax Inc. ( KMX ), Advance Auto Parts Inc. ( AAP ) and PACCAR Inc. ( PCAR ). While CarMax sports a Zacks Rank #1 (Strong Buy), both Advance Auto Parts and PACCAR carry a Zacks Rank #2.
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