I imagined O'Reilly Automotive (ORLY) would do well, but you just can't go on hunches around earning season. We cut back ahead of earnings per the norm Tuesday, but as we opined

I am cutting back ORLY despite what I expect to be a good report, both from Americans continuing to spend more on older cars, and the benefits from improving the performance of CSK Auto stores.

Unlike a lot of stocks that are jumping 20-30% post earnings on beating analyst expectations but missing on the revenue line, O'Reilly did ok in both spots and raised guidance to boot. If only this market was based on fundamentals again instead of student body right trading... but I enjoy seeing our companies doing well on business metrics. I'm still old school at heart even if I am forced to now think as if I have a microchip implanted in my skull.

Please keep in mind sales and earnings growth are NOT organic here - since they did a large acquisition (CSK Auto) so year over year numbers are not just O'Reilly's stores.

  • Auto parts retailer O'Reilly Automotive (ORLY) posted a 53 percent jump in quarterly profit, exceeding analysts' expectations, and raised its 2009 outlook and said its integration of CSK Auto was progressing.
  • Net income rose to $85.5 million, or 62 cents per share, in the second quarter, from $55.8 million, or 48 cents per share, a year earlier. Excluding an acquisition-related charge, O'Reilly earned 63 cents per share, compared with the 55 cents per share expected on average by analysts, according to Reuters Estimates.
  • Sales rose 78 percent to $1.25 billion, matching analysts' expectations.

Full report here

Gross margin % continues to increase as they turnaround the lackluster CSK stores

  • Gross profit for the second quarter of 2009 increased to $604 million (or 48.2% of sales) from $317 million (or 45.0% of sales) for the second quarter of 2008, representing an increase of 90%.

Same store sales for the chain were up 4.8%, with the ORLY stores outperforming but CSK stores continued to improve and close the gap. This is a great turnaround in a very short period of time - good management counts. This upgrade in the old CSK stores is where much of the upside was in the numbers - last quarter CSK Auto store were 1.5% year over year, this time 2.1%.

  • We are pleased to report a solid consolidated comparable store sales increase of 4.8% for the quarter. Stores operating on the O'Reilly systems, including all of the Murray's stores, which are in various conversion stages, as well as all fully-converted stores, generated a comparable store sales increase of 6.1%. This increase was comprised of a 7.8% increase at the core O'Reilly stores, a 3.4% decrease at the converted stores and an 11.9% decrease at the Murray's stores.
  • Stores operating on the legacy CSK systems achieved a third consecutive quarter of positive comparable store sales with a 2.1% increase.

Guidance

  • The Company estimates diluted earnings per share for the third quarter of 2009 to range from $0.53 to $0.57 and estimates diluted earnings per share for the year ended December 31, 2009, to range from $2.06 to $2.10. Excluding the expected impact of acquisition charges for trade names and trademarks related to the acquisition of CSK of $0.03 for the year ended December 31, 2009, adjusted diluted earnings per share is expected to range from $2.09 to $2.13.

Last quarter they guided to $1.92 - $1.96 for the full year.

No change overall in this name - continued solid steady progress as management executes and Americans continue to hold on to cars longer. With earnings out of the way we'll attempt to get our larger long position back if the market gods ever see it fit to have the stock market go down again for more than 4 hours. The stock was up in after hours so I doubt it will be anytime soon we are able to snare our stake at a price we want.

O'Reilly Automotive, Inc. is one of the largest specialty retailers of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, serving both the do-it-yourself and professional installer markets. Founded in 1957 by the O'Reilly family, the Company operated 3,387 stores in 38 states as of June 30, 2009.

[Apr 30, 2009: O'Reilly Automotive Solid Results; Making Progress on CSK Acquisition]

[Apr 1, 2009: Automotive Replacement & Accessories Continues to be a Winning Theme]

[Jan 15, 2009: Thesis - Automotive Replacement and Accessories]

Long O'Reilly Automotive in fund; no personal position

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