O Reilly Automotive's Solid Q4 and FY 2023 Results Lead to Modest Profit-Taking

By Don Francis, Editor
February 10, 2024 11:29 AM UTC
O Reilly Automotive's Solid Q4 and FY 2023 Results Lead to Modest Profit-Taking

Truist Securities's Scot Ciccarelli raised their price target on O Reilly Automotive (NASDAQ: ORLY) by 6.4% from $1,080 to $1,149 on 2024/02/10. The analyst maintained their Strong Buy rating on the stock.

In a recent report, Ciccarelli described O Reilly Automotive's quarterly results as "solid" despite facing "tough comparisons." The company's Q4 and FY 2023 print, released on February 7, exceeded expectations in several key areas. The analyst noted that Truist Securities remains bullish on the auto parts sector, citing long-term tailwinds and a demand structure driven by needs as factors that will continue to fuel positive growth.

For the fourth quarter of 2023, O Reilly Automotive reported earnings per share (EPS) of $9.26, beating the Zacks Consensus Estimate of $9.07 and showing a 10.6% increase compared to Q4 2022. However, the company's revenue of $3.83 billion slightly missed the Zacks Consensus Estimate by 0.16% and was 5.2% lower than Q4 2022. O Reilly Automotive's gross profit margin stood at 51.3%, while the operating income margin was 18.8%. The company generated free cash flow of $256 million.

For the full year 2023, O Reilly Automotive reported EPS of $38.47, representing a 15% year-over-year increase. The company's revenue for the year reached $15.8 billion, marking a 9.7% increase compared to the previous year. The gross profit margin and operating income margin remained steady at 51.3% and 20.2%, respectively. O Reilly Automotive's capital expenditure (capex) for FY 2023 amounted to $1.006 billion, and free cash flow reached $1.988 billion.

Looking ahead to FY 2024, O Reilly Automotive's management provided guidance. The company expects EPS in the range of $41.05 to $41.55 and revenue between $16.8 billion and $17.1 billion. The gross profit margin is projected to be between 51.0% and 51.5%, while the operating income margin is anticipated to range from 19.7% to 20.2%. O Reilly Automotive's capex for the year is estimated to be between $900 million and $1.0 billion, with free cash flow expected to range from $1.8 billion to $2.1 billion.

CEO Brad Beckham expressed satisfaction with the company's performance, highlighting a comparable store sales increase of 3.4% in Q4 2023. Beckham credited the strong sales growth to the team's focus on providing exceptional service.

In addition to Scot Ciccarelli, other analysts also updated their ratings on O Reilly Automotive on February 9, 2024. RBC Capital's Steven Shemesh raised the price target by 7.5%, from $1,003 to $1,078, while maintaining their Buy rating on the stock. Goldman Sachs's Kate McShane increased the price target by 14.5%, from $1,022 to $1,170, and also maintained a Strong Buy rating.

According to WallStreetZen, 71.4% of top-rated analysts currently rate O Reilly Automotive as a Strong Buy or Buy. Meanwhile, 28.6% consider it a Hold, and no analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that O Reilly Automotive will deliver earnings per share (EPS) of $39.12 for the upcoming year. If these predictions hold true, the company's next yearly EPS will see a 3.1% increase on a year-over-year basis.

Since the release of O Reilly Automotive's latest quarterly report on February 7, 2024, the stock price has declined by 3.9%. However, on a year-over-year basis, the stock is still up by an impressive 25.6%, outperforming the S&P 500, which has risen by 23.2% during the same period.

Scot Ciccarelli, the analyst who raised the price target on O Reilly Automotive, is ranked in the top 3% of Wall Street analysts by WallStreetZen. With an average return of 13.8% and a 71.5% win rate, Ciccarelli specializes in the Industrials, Consumer Cyclical, and Consumer Defensive sectors.

O'Reilly Automotive, Inc. is a leading retailer and supplier of automotive aftermarket parts, tools, supplies, equipment, and accessories in the United States. The company offers a wide range of products, including new and remanufactured automotive hard parts, maintenance items, and accessories for domestic and imported automobiles. With over 5,700 stores in the United States and 25 stores in Mexico, O'Reilly Automotive is a prominent player in the industry.

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