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O'Reilly (ORLY) Q4 Earnings & Revenues Beat Expectations - Analyst Blog

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.

O'Reilly Automotive Inc. - Earnings Surprise | FindTheBest

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.

2014 Performance

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.

Store Information

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.

Share Repurchases

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.

Financial Position

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.

Guidance

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


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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