O’Reilly Auto shares slide despite improved earnings

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While O’Reilly Automotive Inc. (Nasdaq: ORLY) produced a better quarterly bottom line, investors sent share prices down on worst-than-expected results.

The Springfield-based auto parts retailer reported first-quarter net income of $321.2 million, or $4.05 per diluted share, a 5.3% percent increase over $304.9 million, or $3.61 per diluted share, a year earlier. Revenue rose 5.6% to $2.41 billion during the first three months of 2019, according to an April 24 news release.

However, analysts at Zacks Investment Research expected $4.06 in share earnings on $2.44 billion in revenue.

“Weather in the first quarter has historically driven volatility in our business, and we experienced significant demand volatility this quarter. While we saw a fair amount of frigid, snowy weather that drove business during the quarter, and should help drive demand for the remainder of the year, we also experienced abnormally high levels of rain, which is not conducive to our business,” O’Reilly Automotive co-president and CEO Greg Johnson said in the release. “Additionally, delays in tax refunds and a reduction of total refund dollars during the quarter were a headwind to our business. However, March finished strong, and we remain confident in the underlying business trends in our industry.”

ORLY shares dipped as low as $367.12 this morning, a 9.2% drop from yesterday’s high of $400.93. The company’s 52-week range is $249.50 to $414.63, with the latter figure hitting April 16. The company’s shares crossed the $400 mark for the first time earlier this month.

First-quarter financial notes:
• Same-store sales were up 3.2%, compared with 3.4% growth in the same quarter a year earlier.
• O’Reilly Automotive invested $322 million to buy back 900,000 of its shares.
• The end-of-quarter store count was 5,306, after the company opened 64 new locations, acquired 25 and closed two.

For the year, O’Reilly Automotive expects to hit $10 billion in sales for the first time and grow same-store sales by 3-5%. As of March 31, the company held roughly $10 billion in assets, according to the release.