O'Reilly (ORLY) to Report Q3 Earnings: What's in the Cards?

O'Reilly Automotive, Inc. ORLY is slated to release third-quarter 2020 results on Oct 28, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $6.31 per share on revenues of $2.97 billion.

This U.S.-based specialty retailer of automotive parts delivered better-than-anticipated results in the last reported quarter on stellar growth in comparable store sales.

Over the trailing four quarters, the company surpassed estimates on three occasions and missed in the other, the average surprise being 20.52%. This is depicted in the graph below:

OReilly Automotive, Inc. Price and EPS Surprise

OReilly Automotive, Inc. Price and EPS Surprise

OReilly Automotive, Inc. price-eps-surprise | OReilly Automotive, Inc. Quote

Investors project an earnings beat for O’Reilly this time around. Reassuringly, our model also indicates the same.

Trend in Estimate Revisions   

The Zacks Consensus Estimate for O’Reilly’s third-quarter earnings per share has been revised upward by 20 cents in the past 30 days. Moreover, it compares favorably with the year-ago quarter’s earnings of $5.08 per share, indicating year-on-year growth of 24.2%. Further, the Zacks Consensus Estimate for quarterly revenues suggests a year-over-year jump of 11.3%.

Earnings Whispers

Our proven model predicts an earnings beat for O’Reilly this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This has been elaborated below.

Earnings ESP: O’Reilly has an Earnings ESP of +4.18%. This is because the Most Accurate Estimate comes in 16 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: O’Reilly currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

After witnessing a slump during the second quarter, vehicle sales across the globe showed signs of recovery during the third quarter. Rising vehicle sales are expected to have spurred demand for parts, components and systems. This, in turn, is anticipated to have fueled O’Reilly’s bottom line during the July-September period.

Moreover, the company is anticipated to have gained from store openings and distribution centers in profitable regions during the third quarter. The Zacks Consensus Estimate for the number of stores at the end of the September-end quarter is pegged at 5,603, indicating a rise from the 5,420 and 5,583 recorded in the year-ago period and the prior quarter, respectively.

Further, in order to serve customers effectively amid the coronavirus crisis, O’Reilly has undertaken several e-commerce initiatives like curbside pick-up for Buy Online and Pick Up In-Store orders, which are likely to have boosted sales during the quarter under review.

Other Stocks to Consider

Here are a few other stocks worth considering, as these too have the right combination of elements to come up with an earnings beat this time around:

Lear Corporation LEA has an Earnings ESP of +2.78% and currently sports a Zacks Rank of 1, at present. It is scheduled to report earnings results on Nov 30.
General Motors GM has an Earnings ESP of +1.25% and carries a Zacks Rank of 3 currently. The company will announce quarterly figures on Nov 5.

Cooper Tire Rubber Company CTB has an Earnings ESP of +22.1% and currently holds a Zacks Rank #3. The company is slated to release quarterly numbers on Oct 29.

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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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