O'Reilly Beats, Expects Higher EPS - Analyst Blog
07 Fevereiro 2013 - 10:50AM
Zacks
O’Reilly Automotive Inc. (ORLY) reported a
22.6% rise in adjusted earnings to $1.14 per share in the fourth
quarter of 2012 from 93 cents in the prior-year quarter, surpassing
the Zacks Consensus Estimate by $1.08. Adjusted net income rose 10%
to $133 million compared with $121 million in the fourth quarter of
2011.
Revenues in the quarter grew 7.2% to $1.5 billion, meeting the
Zacks Consensus Estimate. Comparable store sales (sales for stores
open for at least one year) rose 4.2% for the quarter versus 3.3%
in the same quarter a year ago.
Adjusted operating income went up 9.3% to $223 million from $204
million in the fourth quarter of 2011. Adjusted operating margin
was 15.0% versus 14.7% in the year-ago quarter.
2012 Results
O’Reilly’s adjusted earnings in the year zoomed 24.7% to $4.75 per
share from $3.81 in 2011, outperforming the Zacks Consensus
Estimate of $4.69. Adjusted net income scaled up 12.3% to $586
million from $522 million in 2011.
Revenues soared 7% to $6.2 billion in the year. Comparable store
sales for the year increased 3.8% compared with 4.6% in 2011.
Store Update
During the quarter, O’Reilly opened 24 new stores as planned,
bringing total store openings to 185 for 2012. As of Dec 31, 2012,
the company has operated 3,976 stores. The company reiterated its
guidance to open a total of 190 new stores in 2013.
Share Repurchase
During the quarter under study, O’Reilly repurchased 3.6 million
shares of its common stock at an average price of $87.71,
reflecting a total investment of $312 million. For the full year,
the company has repurchased 16.2 million shares at $89.20 per
share, implying a total investment of $1.45 billion.
Subsequent to the end of the fourth quarter until the release date
of fourth quarter results, the company has repurchased an
additional 1.9 million shares at an average price of $89.84, which
means a total investment of $170 million.
Since the inception of the program in Jan 2011 through the date of
the fourth quarter earnings release, O’Reilly repurchased a total
of 34.0 million shares of its common stock under its share
repurchase program at $76.28 per share, implying an aggregate
investment of $2.6 billion.
On Nov 12, 2012, the company’s Board of Directors increased the
repurchase authorization under its share repurchase program by an
additional $500 million, raising the cumulative authorization to
$3.0 billion. As of Feb 6, 2013, O’Reilly had approximately $409
million remaining under its share repurchase program.
Financial Position
O’Reilly had cash and cash equivalents of $248.1 million as of Dec
31, 2012, a decrease from $361.6 million as of Dec 31, 2011.
Long-term debt was $1.1 billion at year end, up from $797.6 million
as of Dec 31, 2011. This translated into a long-term
debt-to-capitalization ratio of 34.2%, significantly up from 21.9%
at the end of 2011.
In 2012, cash flow from operations improved to $1.3 billion from
$1.1 billion in the previous year, driven mainly by higher profits
and increases in income taxes and accounts payable. Free cash flow
increased 20.3% to $950.8 million from $790.7 million a year ago as
capital expenditures reduced 8.4% to $300.7 million from $328.3
million in 2011.
Guidance
O’Reilly has projected earnings per share in the range of
$1.30–$1.34 and consolidated comparable store sales to increase in
a band of 0% to 2% for the first quarter of 2013.
For full year 2013, the company anticipates higher earnings per
share in the range of $5.57 to $5.67 compared with 2012 and
consolidated comparable store sales to increase by 3% to 5%. The
company also expects higher revenues of $6.6 billion to $6.7
billion compared with 2012, gross margin in the vicinity of 49.9%
to 50.3%, and operating margin between 15.8% and 16.2% for the
year.
O’Reilly expects capital expenditures in the range of $385 million
to $415 million and free cash flow between $450 million and $500
million for the year.
Our Take
O'Reilly Automotive is the third largest specialty retailer of
automotive aftermarket parts, tools, supplies, equipment, and
accessories in the U.S., selling products to both Do-it-Yourself
(DIY) customers and Do-it-for-Me (DIFM) or professional
installers.
The company sells an extensive line of products consisting of new
and remanufactured automotive hard parts (such as mufflers, brakes,
and shock absorbers), maintenance items, accessories, a complete
range of auto body paint and related materials, automotive tools
and professional service equipment. The company currently retains a
Zacks Rank #3, which translates into a short-term rating of
Hold.
Few stocks that are performing well in the industry where the
company operates include Lithia Motors Inc. (LAD)
and Rush Enterprises, Inc. (RUSHA) with a Zacks
Rank #1 (Strong Buy) and CarMax Inc. (KMX) with a
Zacks Rank #2 (Buy).
CARMAX GP (CC) (KMX): Free Stock Analysis Report
LITHIA MOTORS (LAD): Free Stock Analysis Report
O REILLY AUTO (ORLY): Free Stock Analysis Report
RUSH ENTRPRS-A (RUSHA): Free Stock Analysis Report
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