O’Reilly Automotive, Inc. ORLY is slated to release second-quarter 2020 results on Jul 29, after the closing bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $3.72 per share on revenues of $2.44 billion.

This U.S.-based specialty retailer of automotive parts delivered better-than-anticipated results in the last reported quarter on higher cash from operating activities and lower capital expenditures. Over the trailing four quarters, O’Reilly beat estimates on two occasions for as many misses, the average surprise being 1.37{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446}. This is depicted in the graph below:

OReilly Automotive, Inc. Price and Consensus

OReilly Automotive, Inc. Price and Consensus

OReilly Automotive, Inc. price-consensus-chart | OReilly Automotive, Inc. Quote

Which Way are the Estimates Treading?

The Zacks Consensus Estimate for second-quarter earnings per share has been revised upward by 16 cents in the past seven days to $3.72. The figure indicates a year-over-year decrease of 17.52{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446}. The Zacks Consensus Estimate for revenues also suggests a year-over-year decline of 5.69{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446}.

What the Zacks Model Says

Our proven model conclusively predicts an earnings beat for O’Reilly this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can see the complete list of today’s Zacks #1 Rank stocks here.

Earnings ESP: O’Reilly has an Earnings ESP of +40.19{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446}. This is because the Most Accurate Estimate of $5.22 per share comes in higher than the Zacks Consensus Estimate $3.72. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: O’Reilly carries a Zacks Rank of 2 (Buy), currently.

Key Factors

O’Reilly is anticipated to have gained from store openings and distribution centers in profitable regions during the second quarter. The Zacks Consensus Estimate for the number of stores at the end of the June-end quarter is pegged at 5,552, indicating an increase from the 5,344 and 5,533 recorded in the year-ago period and the prior quarter, respectively.

O’Reilly’s cost-containment strategies including the postponement of discretionary capital investments are likely to have aided cash flow. Further, in order to serve customers effectively amid the coronavirus mayhem, it has undertaken several initiatives like curbside pick-up for Buy Online and Pick Up In-Store orders, to boost sales.

Nonetheless, with the pandemic rattling the auto industry, O’Reilly is expected to have been affected by the decline in customer demand and the bleak world economy outlook. The stores are expected to have witnessed a drop in footfall compared with the year-ago levels, hurting the firm’s sales and earnings. The Zacks Consensus Estimate for second-quarter 2020 comparable store sales is expected to be down 1.2{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446} compared with 3.4{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446} comps growth in the year-earlier quarter.

Other Stocks to Consider

Here are some other stocks worth considering, which also have the right combination of elements to come up with an earnings beat this time around:

Penske Automotive Group, Inc. PAG has an Earnings ESP of +207.14{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446} and currently carries a Zacks Rank #3. The company is slated to release second-quarter 2020 earnings on Jul 29.

Genuine Parts Company GPC has an Earnings ESP of +43.33{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446} and carries a Zacks Rank #3 at present. The company is scheduled to report quarterly numberson Jul 30.

Group 1 Automotive, Inc. GPI has an Earnings ESP of +114.82{d93457022679712214ff8a8035fa266341f9634f2c93d5e609b1bbb089e8c446} and carries a Zacks Rank #3 currently. The company is set to announce earnings figures on Jul 30.

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