O'Reilly Gears Up to Report Q2 Earnings: What's in the Cards?
O’Reilly Automotive ORLY is slated to release second-quarter 2025 results on July 24, after the closing bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) and revenues is pegged at 78 cents and $4.53 billion, respectively.
For the second quarter, the consensus estimate for O’Reilly’s earnings has moved down by a penny in the past 90 days. Its bottom-line estimates imply 11.43% growth from the year-ago reported numbers.
The Zacks Consensus Estimate for ORLY's quarterly revenues implies a year-over-year increase of 6.08%. The company's earnings beat estimates in one of the trailing four quarters and missed thrice, delivering an average negative surprise of 1.75%. This is depicted in the graph below:
O'Reilly Automotive, Inc. Price and EPS Surprise
O'Reilly Automotive, Inc. price-eps-surprise | O'Reilly Automotive, Inc. Quote
Q1 Highlights
In the first quarter of 2025, ORLY’s adjusted EPS of $9.35 missed the Zacks Consensus Estimate of $9.83 but increased from $9.20 reported in the year-ago quarter. The company reported net sales of $4.14 billion, which lagged the Zacks Consensus Estimate of $4.17 billion. The top line, however, rose 4% year over year.
Things to Note
Per S&P Global Mobility, the average age of vehicles in the United States increased to 12.8 years in 2025 from 12.6 years in 2024. The growth in the average age of vehicles calls for the need for maintenance to ensure proper functionality, boosting sales of auto parts retailers like O’Reilly.
The company plans to increase its inventory level for the rest of the year to ensure there's enough stock in its stores, hubs and distribution centers. This will help keep products available in all the markets it serves. At the end of the first quarter of 2025, the average inventory per store was $806,000, 4.3% higher than the year-ago period. For 2025, the company aims to grow its inventory per store by 5%.
However, in the first quarter of 2025, SG&A expenses per store increased 4.1% year over year. For 2025, the company expects per-store SG&A expense growth of 2-2.5% amid wage pressures and rising investments in hub stores and technology. While the growth is slower than last year, it remains on an upward trend, impacting the company’s margins.
While a positive sales outlook for 2025 is likely to have bolstered ORLY’s top-line growth in the to-be-reported quarter, rising operating expenses are likely to have hurt the company’s margin in the second quarter.
(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for the automotive parts retailer for the quarter to be reported, as it does not have the right combination of the two key ingredients. A positive Earnings ESP, combined with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), increases the odds of an earnings beat. This is not the case here.
Earnings ESP: ORLY has an Earnings ESP of -0.85%. This is because the Most Accurate Estimate is pegged lower 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: It currently carries a Zacks Rank #2.
Stocks With the Favorable Combination
Here are some players from the auto space that, per our model, have the correct ingredients to post an earnings beat this time around.
Lear Corporation LEA has an Earnings ESP of +5.50% and a Zacks Rank #3 at present. The company is set to release second-quarter 2025 results on July 25. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for LEA’s to-be-reported quarter’s EPS and revenues is pegged at $3.15 per share and $5.74 billion, respectively. Lear beat earnings estimates in each of the trailing four quarters, the average surprise being 12.98%.
BorgWarner Inc. BWA has an Earnings ESP of +11.20% and a Zacks Rank #3 at present. The company is set to release second-quarter 2025 results on July 31.
The Zacks Consensus Estimate for BWA’s to-be-reported quarter’s earnings and revenues is pegged at $1.04 per share and $3.52 billion, respectively. BWA beat earnings estimates in each of the trailing four quarters, the average surprise being 15.74%.
This article originally published on Zacks Investment Research (zacks.com).
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