Core Insights - O'Reilly Automotive Inc. is recognized as one of the best consumer discretionary stocks to buy currently, despite a recent target price reduction by Morgan Stanley due to rising cost pressures [1][8]. Financial Performance - In Q4 2025, O'Reilly reported a 9.8% year-over-year increase in net income, reaching $605.2 million, up from $551.1 million [2]. - Earnings per diluted share increased by 12.7% year-over-year to $0.71, compared to $0.63 [2]. - Sales grew by 7.8% year-over-year to $4.4 billion, with same-store sales contributing 5.6% to this growth [3]. Cost and Margin Analysis - Operating profit margins experienced an 80-basis point year-over-year decline, from 18.8% to 18.0%, primarily due to increased costs [4]. - The cost of sales rose from 51.3% to 51.8% of sales, while selling, general, and administrative expenses increased from 33.0% to 33.3% [4]. Future Guidance - Management anticipates 225 to 235 net store additions and expects same-store sales growth of 3.0% to 5.0% for 2026, projecting revenue growth of approximately 5.2% to 6.9% [5]. - Full-year revenue is expected to be between $18.7 billion and $19.0 billion, with targeted gross profit margins of 51.5% to 52.0% and operating profit margins of 19.2% to 19.7% [5].

Core Viewpoint - O'Reilly Automotive, Inc. has seen mixed activity from institutional investors, with some increasing their stakes while others, like AMJ Financial Wealth Management, have reduced theirs. The company's stock performance and analyst ratings indicate a generally positive sentiment despite some recent earnings forecast revisions. Group 1: Institutional Holdings - AMJ Financial Wealth Management reduced its stake in O'Reilly Automotive by 4.4%, owning 118,023 shares valued at $12,724,000, making it the 5th largest position in their portfolio [2] - Coastline Trust Co increased its holdings by 4.0%, now owning 2,622 shares valued at $283,000 [3] - IAM Advisory LLC boosted its stake by 1.6%, owning 7,312 shares worth $788,000 [3] - Berkshire Asset Management LLC PA increased its position by 1.7%, now holding 7,260 shares valued at $783,000 [3] - Abound Wealth Management raised its stake by 9.6%, owning 1,375 shares valued at $148,000 [3] - EWA LLC increased its stake by 5.1%, now owning 2,559 shares valued at $276,000 [3] - 85.00% of O'Reilly Automotive's stock is currently owned by hedge funds and institutional investors [3] Group 2: Stock Performance and Financials - O'Reilly Automotive shares opened at $93.50, with a market cap of $78.92 billion, a P/E ratio of 31.55, and a 12-month low of $85.55 and high of $108.71 [4] - The company reported $4.41 billion in revenue for the last quarter, up 7.8% year-over-year, but missed earnings per share estimates at $0.71 [5] - O'Reilly Automotive has set its FY 2026 guidance at 3.100-3.200 EPS, with analysts forecasting 43.94 EPS for the current year [5] Group 3: Analyst Ratings - DA Davidson reaffirmed a "buy" rating with a $110.00 price target [6] - Wolfe Research upgraded the stock from "hold" to "strong-buy" [6] - Raymond James Financial upgraded the rating to "outperform" with a $105.00 target price [6] - Royal Bank Of Canada set a $109.00 price target and gave an "outperform" rating [6] - Consensus rating is "Moderate Buy" with a target price of $110.26 [6] Group 4: Insider Transactions - Senior Vice President Christopher Andrew Mancini sold 2,355 shares at an average price of $101.31, reducing his position by 98.83% [8] - Senior Vice President Philip M. Hopper sold 3,500 shares at an average price of $101.25, reducing his position by 42.21% [8] - Insiders own 1.01% of the company's stock [8] Group 5: Company Overview - O'Reilly Automotive is a leading retailer and distributor in the automotive aftermarket, supplying parts, tools, and accessories for both professional service providers and DIY customers [9] - The company operates a broad supply chain with regional distribution centers to support rapid replenishment of store inventory [10]

Based in Springfield, Missouri, O'Reilly Automotive, Inc. (ORLY) ranks among the premier automotive aftermarket retailers. Valued at approximately $78.3 billion, it equips professional repair shops and do-it-yourself customers with replacement parts, maintenance supplies, tools, equipment, and private-label products Over the past 52 weeks, O'Reilly’s shares have risen nearly 9%, slightly trailing the S&P 500 Index ($SPX), which gained 11.7% over the same period. Year-to-date (YTD), the stock has climbed ...

Group 1 - The core idea of O'Reilly Automotive's stock split is to increase accessibility for investors by lowering the price per share while maintaining the same fundamental value of the company [1][2] - O'Reilly Automotive executed a 15-for-1 stock split in June last year, and its shares have appreciated significantly, up 58,000% since its IPO in 1993 [2][3] - The company operates nearly 6,600 stores primarily in the U.S., selling aftermarket auto parts, and has seen its stock price triple in the last five years [3][4] Group 2 - O'Reilly Automotive reported a same-store sales growth of 4.7% in 2025, marking the 33rd consecutive year of positive growth in this metric [4] - The demand for auto parts remains strong regardless of economic conditions, supported by an aging vehicle fleet and increased miles driven, which contributes to consistent revenue growth [5][6] - From 2015 to 2025, O'Reilly's revenue increased by 122%, and net income rose by 168%, aided by stock buybacks and new store openings [6] Group 3 - O'Reilly's current price-to-earnings (P/E) ratio is 31.8, which is 26% higher than the S&P 500 index, reflecting the company's quality and market positioning [7] - Value investors may be hesitant to invest unless the P/E ratio drops below 25, indicating a potential barrier for new investments at current valuations [7]

Core Viewpoint - O'Reilly Automotive reported mixed financial results for the fourth quarter, with earnings per share falling short of analyst expectations while sales exceeded projections [1][2]. Financial Performance - The company reported quarterly earnings of 71 cents per share, missing the analyst consensus estimate of 72 cents per share [1]. - Quarterly sales reached $4.414 billion, surpassing the analyst consensus estimate of $4.389 billion [1]. Future Guidance - For FY2026, O'Reilly Automotive expects GAAP EPS to be in the range of $3.10 to $3.20, compared to market estimates of $3.31 [2]. - The company anticipates sales between $18.700 billion and $19.000 billion, while projections were at $18.968 billion [2]. Stock Performance - Following the earnings announcement, O'Reilly Automotive shares fell by 0.8%, trading at $92.15 [2]. Analyst Ratings and Price Targets - Mizuho analyst David Bellinger maintained an Outperform rating but lowered the price target from $110 to $105 [3]. - Truist Securities analyst Scot Ciccarelli maintained a Buy rating and reduced the price target from $109 to $107 [3]. - RBC Capital analyst Steven Shemesh also maintained an Outperform rating, lowering the price target from $111 to $109 [3].

Group 1 - O'Reilly Automotive, Inc. (ORLY) is viewed as a compounder that invests in its own growth through expansion and shareholder rewards via significant share repurchases [2] - The company does not pay a dividend, which could enhance investor interest [2] - BAD BEAT Investing, led by Quad 7 Capital, has a history of providing investment opportunities and has maintained an average position of 95% long and 5% short since May 2020 [2] Group 2 - BAD BEAT Investing focuses on short- and medium-term investments, income generation, special situations, and momentum trades, aiming to teach investors to become proficient traders [2] - The service offers in-depth research, clear entry and exit targets, and various trading tools, including chat rooms and daily analyst summaries [2] - The analysts involved have diverse expertise in business, policy, economics, mathematics, game theory, and sciences, contributing to a comprehensive investment approach [2]

Core Viewpoint - O'Reilly Automotive experienced a 3.9% decline in stock price despite stable sales, primarily due to earnings per share falling below expectations and ongoing pressure on profit margins [1][1]. Group 1: Financial Performance - The company's sales remained stable during the reporting period [1]. - Earnings per share were reported to be lower than market expectations [1]. Group 2: Market Reaction - The stock price of O'Reilly Automotive dropped by 3.9% at the end of trading on Thursday [1]. Group 3: Profitability Concerns - The company continues to face pressure on its profit margins [1].

Financial Data and Key Metrics Changes - The company reported a total sales increase of 6.4% to $17.8 billion for 2025, reflecting over 50% growth in total sales volume over the last five years [5][39] - Operating profit for the full year was $3.5 billion, a 6.4% increase over 2024, with an operating profit margin of 19.5%, flat compared to the prior year [6][37] - Diluted earnings per share (EPS) for the fourth quarter was $0.71, a 13% increase year-over-year, while full-year EPS was $2.97, a 10% increase over 2024 [7][39] Business Line Data and Key Metrics Changes - Comparable store sales increased by 5.6% in the fourth quarter, with a full-year comparable store sales increase of 4.7% [4][8] - The professional business saw a comparable store sales increase of over 10% for the second consecutive quarter, while the DIY segment experienced low single-digit growth [9][11] - Average ticket growth was in the mid-single digits, driven by same-SKU inflation of approximately 6% [9][10] Market Data and Key Metrics Changes - The U.S. car park has seen an increase in total miles driven of approximately 1% over the last two years, supporting steady growth in demand for automotive aftermarket services [15] - The company anticipates continued growth in both professional and DIY businesses, with expectations for comparable store sales guidance for 2026 set at 3%-5% [14][16] Company Strategy and Development Direction - The company plans to accelerate new store growth, targeting 225-235 net new store openings for 2026, an increase of approximately 25 stores over 2025 [21][22] - Continued investment in distribution capabilities is a key component of the growth strategy, with a new distribution center opened in Stafford, Virginia, and another planned in Fort Worth, Texas [30][31] - The company aims to enhance its competitive positioning by focusing on customer service and operational efficiency to sustain industry-leading growth momentum [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stable industry environment for 2026, despite cautious consumer sentiment and cost pressures [15][19] - The company expects to see continued growth in average ticket values, primarily supported by anticipated same-SKU inflation [16][17] - Management acknowledged substantial cost pressures in 2025, particularly related to healthcare and self-insurance programs, but remains focused on effective business management [7][35] Other Important Information - The company generated free cash flow of $1.6 billion in 2025, with expectations for 2026 to be in the range of $1.8-$2.1 billion [41][42] - The adjusted debt to EBITDA ratio was 2.03 times at the end of the fourth quarter, remaining below the leverage target of 2.5 times [43][44] - The company repurchased 23 million shares in 2025 at an average price of $92.26, totaling $2.1 billion [44] Q&A Session Summary Question: How long could elevated expenses, like healthcare, continue? - Management indicated that the pressure from healthcare costs has persisted longer than expected, and there is cautiousness regarding the outlook for 2026 [47][50] Question: Will SG&A per store growth moderate in the second half of 2026? - Management did not provide a specific exit rate but acknowledged that structural pieces of managing spend are in place, with a cautious posture for 2026 [48][49] Question: Can you provide insights on the Virginia distribution center and its impact? - Management expressed excitement about the new distribution center in Virginia, which will enhance service capabilities in the Mid-Atlantic region and support new store growth [56][58] Question: What are the risks associated with SG&A growth this year? - Management acknowledged that while there are pressures from self-insurance items, they feel confident in managing overall costs and have opportunities to lean into the business [75][76]

Financial Data and Key Metrics Changes - The company reported a comparable store sales increase of 5.6% in Q4 2025, bringing the full year comparable sales to 4.7%, which was at the high end of the revised guidance range of 4%-5% [4][5] - Total sales increased by 6.4% to $17.8 billion, reflecting over 50% growth in total sales volume over the last five years [5] - Operating profit for the full year was $3.5 billion, a 6.4% increase over 2024, with an operating profit margin of 19.5%, flat compared to the prior year [6][7] - Diluted earnings per share (EPS) for Q4 was $0.71, a 13% increase year-over-year, while full year EPS was $2.97, a 10% increase over 2024 [7][8] Business Line Data and Key Metrics Changes - The professional business saw a comparable store sales increase of over 10% for the second consecutive quarter, while the DIY business generated a positive comp in the low single digits [8][9] - Average ticket growth was in the mid-single digits, driven by same-SKU inflation of approximately 6% [9][10] - The company experienced modest pressure in DIY transaction counts, particularly in discretionary categories [11][12] Market Data and Key Metrics Changes - The U.S. car park has seen an increase in total miles driven of approximately 1% over the last two years, with expectations for steady growth supported by the total size of the car park [15] - The company anticipates continued growth in both professional and DIY businesses, with expectations for comparable store sales guidance for 2026 set at 3%-5% [14][16] Company Strategy and Development Direction - The company plans to prioritize new store expansion, targeting 225-235 net new store openings for 2026, an increase of approximately 25 stores over 2025 [21][22] - Continued investment in distribution capabilities is a key component of the growth strategy, with a focus on enhancing the distribution network to support store growth [30][31] - The company aims to maintain a strong competitive position by leveraging capital and operating investments to drive long-term growth and high returns [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stable industry environment for 2026, despite cautious consumer sentiment [15][16] - The company expects to see continued growth in average ticket values, primarily supported by anticipated same-SKU inflation [16][17] - Management acknowledged substantial cost pressures in 2025, particularly related to healthcare and self-insurance programs, but remains focused on effective business management [7][36] Other Important Information - The company generated free cash flow of $1.6 billion in 2025, with expectations for 2026 to be in the range of $1.8-$2.1 billion [41][42] - The adjusted debt to EBITDA ratio at the end of Q4 was 2.03 times, remaining below the leverage target of 2.5 times [43][44] - The company repurchased 23 million shares in 2025 at an average price of $92.26, totaling $2.1 billion [44] Q&A Session Summary Question: How long could elevated expenses, like healthcare, continue? - Management indicated that the pressure from healthcare costs has persisted longer than expected, and there is caution regarding the outlook for 2026 [47][50] Question: Is SG&A per store growth expected to moderate in the second half of 2026? - Management did not provide a specific exit rate but acknowledged that structural pieces of managing spend are in place, with a cautious approach to 2026 [48][49] Question: Can you provide insights on the Virginia distribution center and its impact? - The new distribution center in Virginia is expected to enhance service capabilities in the Mid-Atlantic region, with plans for aggressive market penetration [56][58] Question: What are the risks associated with SG&A growth this year? - Management noted that while there are pressures from self-insurance costs, they are focused on managing overall cost structure effectively [75][76]

Financial Data and Key Metrics Changes - The company reported a total sales increase of 6.4% to $17.8 billion for 2025, reflecting over 50% growth in total sales volume over the last five years [5][39] - Operating profit for the full year was $3.5 billion, a 6.4% increase over 2024, with an operating profit margin of 19.5%, flat compared to the prior year [6][39] - Diluted earnings per share (EPS) for Q4 was $0.71, a 13% increase year-over-year, while full-year EPS was $2.97, a 10% increase over 2024 [8][39] Business Line Data and Key Metrics Changes - Comparable store sales increased by 5.6% in Q4, with professional business driving stronger growth at over 10% for the second consecutive quarter [9][10] - The DIY segment experienced low single-digit growth in comparable store sales, with some pressure on transaction counts noted [12][19] - Average ticket value grew in the mid-single digits, driven by same-SKU inflation of approximately 6% [10][18] Market Data and Key Metrics Changes - The U.S. car park has seen an increase in total miles driven of approximately 1% over the last two years, supporting steady growth in demand for automotive aftermarket services [15] - The company anticipates a stable industry environment in 2026, despite cautious consumer sentiment [15][16] Company Strategy and Development Direction - The company plans to open 225-235 net new stores in 2026, an increase of approximately 25 stores over 2025, driven by strong new store performance [22][23] - Capital expenditures for 2026 are projected to be between $1.3 billion and $1.4 billion, with a focus on new store growth and distribution capabilities [21][24] - The company aims to enhance its competitive positioning through continued investments in technology and customer service [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate cost pressures and maintain strong operating margins, despite facing headwinds from healthcare and self-insurance costs [7][34] - The guidance for 2026 includes expected comparable store sales growth of 3%-5%, reflecting a more cautious consumer environment [14][16] - Management remains optimistic about the company's growth potential, emphasizing the importance of customer service and market share gains [25][38] Other Important Information - The effective tax rate for Q4 was 21.5%, up from 19.6% in the previous year, with a full-year effective tax rate of 21.7% expected for 2026 [39][40] - Free cash flow for 2025 was $1.6 billion, with expectations for 2026 to be in the range of $1.8 billion to $2.1 billion [41][42] - The company repurchased 23 million shares in 2025, totaling $2.1 billion, as part of its ongoing share repurchase program [43] Q&A Session Summary Question: How long could elevated healthcare expenses continue? - Management indicated that the pressure from healthcare costs has persisted longer than expected, and they remain cautious about the outlook for 2026 [46][49] Question: Any other line items to consider for modeling? - Management highlighted self-insurance items and increased depreciation as key components to monitor moving forward [51][53] Question: Insights on the Virginia distribution center and its impact? - The new distribution center in Virginia is expected to enhance service capabilities in the Mid-Atlantic region, with plans for aggressive market penetration [57][60] Question: What are the risks of SG&A growth exceeding expectations? - Management acknowledged the potential for elevated SG&A growth due to inflationary pressures but emphasized their focus on managing costs effectively [76][78]