ORLY O Reilly Automotive Inc

Pep Boys -- Manny, Moe & Jack (PBY) saw more than six-fold jump in profits to $76.7 million or $1.43 per share (excluding merger termination fees and severance costs) in the second quarter of the year ended July 28, 2012 from $11.9 million or 22 cents (excluding asset impairment charge, acquisition related expenses and benefit from the release of state tax valuation allowances) in the comparable quarter of prior year.

With this, the automotive parts supplier’s profits drove past the Zacks Consensus Estimate by a significant margin of $1.28 per share.

Revenues in the quarter grew marginally by 0.6% to $525.7 million from $522.6 million a year ago. It was in line with the Zacks Consensus Estimate. The revenue growth was mainly driven by the improvement in the company’s service business.

Comparable sales were flat with a 3.1% rise in comparable service revenues and a 0.9% decline in comparable merchandise revenues.

The company believes strong industry fundamentals driven by consistent demand for maintenance and repair services will drive its earnings. However, rising gas prices is expected to mar company’s sales.

Further, the company intends to improve its debt structure. It aims to reduce long-term debt by approximately $100 million, settle its interest rate swap, extend its maturities and reduce its overall interest expense.

Pep Boys, based in Philadelphia, supplies tires, batteries, new and remanufactured parts for vehicles, chemicals and maintenance items, fashion, electronic, and performance accessories. It also provides non-automotive merchandise such as generators, power tools and personal transportation products.

The company, which competes with O’Reilly Automotive Inc. (ORLY), AutoZone Inc. (AZO) and CarMax Inc. (KMX), currently retains a Zacks #3 Rank, which translates to a short-term rating of Hold.

 
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