O'Reilly Automotive’s first quarter results drew a negative market reaction following revenue and profit figures that missed Wall Street expectations. Management attributed the quarter’s performance to steady demand across both its DIY and professional segments, with comparable store sales growth driven primarily by increased ticket counts. CEO Brad Beckham noted, “Our comp outperformance was driven by strong ticket counts relative to our expectations on both sides of the business.” The quarter was marked by weather variability and delayed tax refunds, which created uneven sales patterns, but overall demand remained consistent with trends seen in prior periods.
Is now the time to buy ORLY? Find out in our full research report (it’s free).
O'Reilly (ORLY) Q1 CY2025 Highlights:
- Revenue: $4.14 billion vs analyst estimates of $4.17 billion (4% year-on-year growth, 0.9% miss)
- EPS (GAAP): $0.62 vs analyst expectations of $0.66 (5.6% miss)
- Adjusted EBITDA: $872.1 million vs analyst estimates of $908.5 million (21.1% margin, 4% miss)
- The company reconfirmed its revenue guidance for the full year of $17.55 billion at the midpoint
- EPS (GAAP) guidance for the full year is $43.15 at the midpoint, beating analyst estimates by 1,360%
- Operating Margin: 17.9%, down from 18.9% in the same quarter last year
- Locations: 6,416 at quarter end, up from 6,217 in the same quarter last year
- Same-Store Sales rose 3.6% year on year, in line with the same quarter last year
- Market Capitalization: $75.91 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions O'Reilly’s Q1 Earnings Call
- Michael Lasser (UBS) asked about the ongoing impact of tariffs and O’Reilly’s ability to pass along costs. CEO Brad Beckham and President Brent Kirby emphasized the complexity and fluidity of the situation, stating it was too early to quantify the full effect but expressed confidence in the company’s ability to manage supplier negotiations and pricing.
- Simeon Gutman (Morgan Stanley) questioned whether O’Reilly would consider ramping up SG&A spending or adjusting pricing strategies to pursue market share during this period of uncertainty. Beckham indicated no plans for additional SG&A cycles or aggressive price-based competition, emphasizing a focus on disciplined management.
- Gregory Melich (Evercore) probed the competitive environment and whether market disruption among independents might provide acquisition or share-gain opportunities. Beckham noted the landscape remains largely stable but acknowledged that small “tuck-in” M&A opportunities could materialize as some independents struggle.
- Chris Bottiglieri (BNP) inquired about the company’s ability to shift sourcing out of China and how flexible O’Reilly’s supply chain is in adapting to tariff changes. Kirby detailed ongoing efforts to diversify sourcing, mentioning established relationships in India, Vietnam, and Thailand to provide future flexibility.
- Kate McShane (Goldman Sachs) asked about potential price elasticity and the consumer’s willingness to absorb higher prices if tariffs persist. CFO Jeremy Fletcher said the industry historically exhibits low price sensitivity due to the nondiscretionary nature of most purchases, but acknowledged that unprecedented cost increases could eventually affect consumer behavior.
Catalysts in Upcoming Quarters
In the coming quarters, our team will monitor (1) the progression and industry response to tariff and trade policy changes, (2) O’Reilly’s ability to maintain disciplined SG&A spending in the face of cost pressures, and (3) continued execution of the company’s store expansion and inventory optimization strategies. We will also track whether consumer spending shifts further toward maintenance or discretionary categories as economic conditions evolve.
O'Reilly currently trades at $88.13, down from $91.62 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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