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O'Reilly (ORLY) to Report Q2 Earnings: What's in the Cards?

O'Reilly Automotive Inc.ORLY is set to release second-quarter 2017 earnings after the markets close on Jul 26. The company delivered a positive earnings surprise in one of the trailing four quarters, with a negative average surprise of 2.3%.

Let's see how things have shaped up for the forthcoming announcement.

Factors Influencing this Quarter

O'Reilly's stores are concentrated in certain locations in the U.S. Thus, its business is exposed to the economic and weather conditions of these regions. The company's strategy of lowering the time-to-market for its products to meet the demand in the professional installer market, places it at a logistical disadvantage against competitors.

Additionally, much of O'Reilly's cash is locked in inventories, which can affect its short-term liquidity in periods of low sales. Further, the company expects selling, general and administrative expenses to increase in 2017 from 2016 on rising costs.

However, for second-quarter 2017, O'Reilly projects earnings per share in the range of $3.10-$3.20, compared with $2.65, recorded in second-quarter 2016. The company expects consolidated comparable store sales to increase 3-5%. For full-year 2017, it expects earnings per share in the band of $12.05-$12.15, higher than $10.73 earned in 2016.

O'Reilly projects a consolidated comparable store sales increase in the 3%-5% range, during the year. The company anticipates revenues in the band of $9.1-$9.3 billion, higher than $8.59 billion, recorded in 2016.

Earnings Whispers

Our proven model does not conclusively show that O'Reilly is likely to beat estimates this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. But that is not the case here as you will see below:

Zacks ESP: The Earnings ESP represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate. O'Reilly's Earnings ESP is -0.68% because the Most Accurate estimate of $2.91 is pegged below the Zacks Consensus Estimate of $2.93. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

O'Reilly Automotive, Inc. Price and EPS Surprise

O'Reilly Automotive, Inc. Price and EPS Surprise | O'Reilly Automotive, Inc. Quote

Zacks Rank: O'Reilly currently carries a Zacks Rank #5 (Strong Sell). Note that we caution against Sell-rated stocks (#4 or 5) from going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Price Performance

O'Reilly has lost 29.9% over the last three months, underperforming the 24% decline of the industry it belongs to.

Stocks to Consider

Here are some better-ranked companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter:

Cummins Inc. CMI has an Earnings ESP of +3.1% and a Zacks Rank #2. The company is expected to report second-quarter 2017 results on Aug 1. You can see the complete list of today's Zacks #1 Rank stocks here .

CNH Industrial N.V. CNHI has an Earnings ESP of +12.5% and a Zacks Rank #2. The company's second-quarter 2017 financial results are expected to release on Jul 26.

BorgWarner Inc. BWA has an Earnings ESP of +1.12% and a Zacks Rank #3. The company's second-quarter 2017 financial results are scheduled to release on Jul 27.

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O'Reilly Automotive, Inc. (ORLY): Free Stock Analysis Report

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Cummins Inc. (CMI): 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.


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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