O'Reilly Profits Up 28% - Analyst Blog
27 Outubro 2011 - 2:19PM
Zacks
O’Reilly Automotive Inc. (ORLY) revealed a 28%
increase in profit to $1.10 per share in the third quarter of 2011
from 86 cents per share (excluding special items) in the comparable
quarter of 2010. With this, the company has beaten the Zacks
Consensus Estimate by 10 cents per share. In absolute terms, profit
was $148 million compared with $122 million in the third quarter of
2010.
Sales in the
quarter grew 8% to $1.54 billion from $1.43 billion in the
comparable quarter of 2010. Comparable store sales (sales for
stores open at least one year) rose 4.8% for the quarter versus
11.1% in the same quarter a year ago.
Gross profit increased 9% to $754 million (49.1% of sales) from
$693 million (48.6% of sales) for the third quarter of 2010.
Selling, general and administrative expenses went up 5% to $513
million from $488 million in the prior-year quarter. Operating
income rose 21% to $241 million (15.7% of sales) from $199 million
(14.0% of sales) in the third quarter of 2010.
During the quarter, O’Reilly opened 50 new stores, which brings
its total store openings to 149 for the first nine months of 2011.
With this, the company is on track to reach its goal of 170 (net)
store openings in 2011.
Share Repurchase
On August 5, 2011, the O’Reilly’s Board of Directors raised the
cumulative authorization under the share repurchase program to $1
billion. During the quarter under study, the company has
repurchased 8.2 million shares of its common stock at an average
price of $61.51, for a total investment of $502 million.
During the first nine months of 2011, the company has
repurchased 14.1 million shares of its common stock at an average
price of $59.69, for a total investment of $840 million. Subsequent
to the end of the third quarter and until the date of this release,
the company has repurchased an additional 300 thousand shares of
its common stock at an average price of $65.81, for a total
investment of $19 million.
Therefore, as of the date of the company’s release of results,
the company had about $141 million worth of shares remaining under
its repurchase program.
Financial Position
O’Reilly had cash and cash equivalents of $277 million as of
September 30, 2011, a significant increase from $43 million in the
corresponding period a year ago. Long-term debt was $798 million as
of the above date, up from $431 million as of September 30, 2010.
This translated into a lower long-term debt-to-capitalization ratio
of 22%, significantly up from 12% at the end of third quarter of
2010.
In the first nine months of the year, net cash flow from
operations increased to $840 million from $593 million in the
previous year. The increase was primarily attributed to improved
profits, higher accounts payable and a decline in inventory.
Meanwhile, capital expenditures (net) reduced to $243 million from
$275 million in the first nine months of 2010.
Guidance
O’Reilly has projected earnings per share in the range of 80
cents–84 cents and consolidated comparable store sales to increase
in the range of 3% to 5% for the fourth quarter of 2011.
For full year 2011, the company anticipates adjusted earnings
per share in the range of $3.68 to $3.72 and consolidated
comparable store sales to increase by 4% to 5.5%. This compared with the
previous guidance of earnings per share of between $3.53 and $3.63
and a rise in consolidated comparable store sales of 3% to 6%.
The company also provided revenue guidance of $5.75 billion to
$5.85 billion, gross margin guidance of 48.6% to 48.8%, and
operating margin guidance of 14.4% to 14.6%.
Our Take
O’Reilly is continuously benefiting from its dual market
strategy and a strong distribution network. As of September 30,
2011, the company raised its total store count to 3,707 stores in
39 states. The retailer’s store base has been strengthened by the
acquisition of CSK. These, along with improved results, have led
the company to retain a Zacks #2 Rank on its stock, which
translates into
a short-term (1 to 3 months) rating of Buy.
Peer Performance
O’Reilly’s competitor, Genuine Parts Company
(GPC) posted a 15% rise in profit to $151.8 million in the third
quarter of 2011 from $131.8 million in the year-ago quarter. On per
share basis, profits were 97 cents, up 17% from 83 cents delivered
in the comparable quarter last year, surpassing the Zacks Consensus
Estimate by 2 cents.
GENUINE PARTS (GPC): Free Stock Analysis Report
O REILLY AUTO (ORLY): Free Stock Analysis Report
Zacks Investment Research
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