Core Insights - O'Reilly Automotive reported record revenue and earnings for Q3 2025, with a notable increase in comparable store sales and diluted earnings per share [1][2][3] Financial Performance - Q3 2025 sales increased by $341 million, or 8%, reaching $4.71 billion compared to $4.36 billion in Q3 2024 [2] - Gross profit for Q3 2025 rose 8% to $2.44 billion, representing 51.9% of sales, up from 51.6% in the same period last year [2] - Selling, general and administrative expenses (SG&A) increased 8% to $1.46 billion, accounting for 31.1% of sales, compared to 31.0% in Q3 2024 [2] - Operating income for Q3 2025 grew 9% to $976 million, or 20.7% of sales, compared to 20.5% in Q3 2024 [2] Net Income and Earnings Per Share - Net income for Q3 2025 increased by $60 million, or 9%, to $726 million, which is 15.4% of sales, compared to 15.2% in Q3 2024 [3] - Diluted earnings per share for Q3 2025 rose 12% to $0.85 on 853 million shares, compared to $0.76 on 875 million shares in Q3 2024 [3] Year-to-Date Performance - Year-to-date sales for the first nine months of 2025 increased by $755 million, or 6%, to $13.37 billion from $12.61 billion in the same period last year [4] - Gross profit for the first nine months of 2025 increased 7% to $6.89 billion, representing 51.5% of sales, compared to 51.2% in the same period last year [4] - SG&A for the first nine months of 2025 rose 8% to $4.26 billion, accounting for 31.8% of sales, compared to 31.2% in the same period last year [4] - Operating income for the first nine months of 2025 increased 5% to $2.63 billion, or 19.7% of sales, down from 19.9% in the same period last year [4] Comparable Store Sales - Comparable store sales for Q3 2025 increased by 5.6%, building on a 1.5% increase in the same period last year [6][7] - For the first nine months of 2025, comparable store sales rose 4.5%, following a 2.4% increase in the same period last year [8] Share Repurchase Program - In Q3 2025, the company repurchased 4.3 million shares at an average price of $98.08, totaling $420 million [9] - For the first nine months of 2025, the company repurchased 17.6 million shares at an average price of $90.95, totaling $1.60 billion [9] Updated Guidance - The company raised its full-year 2025 comparable store sales guidance to a range of 4.0% to 5.0% [4] - Total revenue for 2025 is projected to be between $17.6 billion and $17.8 billion [10] - Diluted earnings per share for 2025 is expected to be between $2.90 and $3.00 [10]

Core Viewpoint - O'Reilly Automotive is expected to report improved earnings and revenue for the third quarter, indicating positive growth trends in the automotive retail sector [1]. Earnings Expectations - The company is projected to report earnings of 83 cents per share for Q3, an increase from 76 cents per share in the same period last year [1]. - The consensus estimate for quarterly revenue is $4.69 billion, up from $4.36 billion a year earlier [1]. Recent Performance and Guidance - In Q2, O'Reilly Automotive posted in-line earnings and raised its FY25 sales guidance, reflecting confidence in future performance [2]. - The stock price increased by 0.3% to close at $101.31 on the day prior to the earnings announcement [2]. Analyst Ratings and Price Targets - Wells Fargo analyst Zachary Fadem maintained an Overweight rating and raised the price target from $105 to $115 [4]. - UBS analyst Michael Lasser maintained a Buy rating and increased the price target from $115 to $120 [4]. - TD Cowen analyst Max Rakhlenko maintained a Buy rating and raised the price target from $112 to $125 [4]. - Evercore ISI Group analyst Greg Melich maintained an Outperform rating and increased the price target from $108 to $110 [4]. - DA Davidson analyst Michael Baker maintained a Buy rating and raised the price target from $107 to $115 [4].

Group 1 - O'Reilly Automotive, Inc. is set to release its third-quarter earnings results on October 22, with analysts expecting earnings of 83 cents per share, an increase from 76 cents per share in the same period last year [1] - The consensus estimate for quarterly revenue is $4.69 billion, compared to $4.36 billion a year earlier [1] - In the second quarter, O'Reilly Automotive reported in-line earnings and raised its FY25 sales guidance, leading to a 0.3% increase in share price to close at $101.31 [2] Group 2 - Analysts have maintained positive ratings for O'Reilly Automotive, with Wells Fargo raising the price target from $105 to $115 [4] - UBS increased its price target from $115 to $120, while TD Cowen raised it from $112 to $125 [4] - Evercore ISI Group and DA Davidson also maintained positive ratings, with price targets increased to $110 and $115 respectively [4]

Performance Overview - The Akre Focus Fund's Institutional share class reported a third quarter 2025 performance of -3.65%, significantly underperforming the S&P 500 Total Return, which was at 8.12% [3][4] - For the trailing 12-month period ending September 30, 2025, the Fund's Institutional share class achieved a return of 3.71%, compared to 17.60% for the S&P 500 Total Return [3] Key Holdings Impact - The primary contributor to the Fund's poor performance was a 26.06% decline in the share price of Constellation Software, which accounted for a 3.56% detriment to the Fund's performance in the quarter [5][6] - Constellation Software has been held by the Fund for over 11 years, with a compound annual rate of return of 24.97% since its initial purchase [7] Long-term Perspective on Constellation Software - Despite the recent drawdown, the Fund maintains confidence in Constellation Software's ability to navigate technological changes and protect its market position [8][9] - Constellation has demonstrated a compound annual total revenue growth rate of approximately 20% over the past decade, indicating strong underlying business performance [8] Leadership Transition - Mark Leonard, the founder of Constellation Software, announced his immediate step down from the President role due to health issues, raising concerns about leadership continuity [12][10] - The Fund expresses optimism regarding Mark Miller, the new President, who has been with Constellation since its first acquisition and is expected to uphold the company's foundational principles [14] Sector and Holdings Composition - As of September 30, 2025, the top five holdings in the Fund included Mastercard (12.4%), Brookfield Corp (10.6%), and Constellation Software (10.1%) [28] - The sector weightings revealed a significant concentration in Financials (52.1%) and Information Technology (20.7%) [28]

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh. ...

Core Insights - The article discusses the impact of stock splits and share repurchase programs on investor sentiment and company performance, particularly highlighting O'Reilly Automotive as a leading example in 2025 [2][11][15]. Stock Splits - Stock splits are cosmetic changes that adjust share price and outstanding share count without affecting a company's market cap or operating performance [2]. - Forward stock splits, which lower share prices to make stocks more accessible to retail investors, are generally viewed positively, while reverse splits are often associated with struggling companies [3][4]. - In 2024, notable forward stock splits were seen in tech companies, but 2025 has shifted focus to high-profile non-tech stock splits [5]. Company Performance - Interactive Brokers Group completed its first-ever stock split (4-for-1) and replaced Walgreens Boots Alliance in the S&P 500, reflecting its successful automation investments [6][7]. - Fastenal has embraced stock splits as part of its corporate culture, completing its ninth forward split since going public [8]. - O'Reilly Automotive announced a significant 15-for-1 stock split, which was approved by shareholders, marking its largest split to date [11]. Market Trends - The average age of vehicles on U.S. roadways has increased to 12.8 years in 2025, driving demand for auto parts from companies like O'Reilly [13]. - O'Reilly's supply chain improvements, including a hub-and-spoke distribution model, enhance its ability to meet customer needs efficiently [14]. Share Repurchase Programs - O'Reilly Automotive has executed a substantial share repurchase program since January 2011, spending $26.59 billion to retire nearly 60% of its outstanding shares [16]. - The company's buyback strategy is expected to positively impact earnings per share (EPS) as it continues to deliver steady revenue and profit growth [16][17].

Industry Overview - The Zacks Automotive - Retail and Wholesale - Parts industry is currently facing challenges, with expectations of cooling vehicle sales as electric vehicle (EV) incentives expire and high prices deter buyers, impacting demand for parts and accessories [1][4] - The industry includes retailing, distribution, and installation of vehicle parts and accessories, with consumers having the option to repair vehicles themselves (DIY) or seek professional services (DIFM) [3] Factors Impacting the Industry - Vehicle sales are expected to soften due to high prices and cooling EV demand, which may lead to a decline in auto parts and accessories demand [4] - The complexity of modern vehicles is shifting repairs from DIY consumers to professional service providers, shrinking the DIY segment while expanding the DIFM side [5] - High capital demands for electrification and digital transformation are straining profitability, requiring significant investment in new technologies and distribution networks [6] - The aging U.S. vehicle fleet, with an average age of 12.8 years, is driving steady demand for replacement parts and maintenance, benefiting the aftermarket [7] Industry Performance and Valuation - The Zacks Auto Retail & Wholesale Parts industry ranks 184, placing it in the bottom 24% of 245 Zacks industries, indicating subdued near-term prospects [8][10] - Over the past year, the industry has underperformed compared to the Auto, Tires, and Truck sector and the S&P 500, with a growth of 15.5% versus the S&P 500's 16.2% and the sector's 48.1% [11] - The industry is currently trading at an EV/EBITDA ratio of 28.47X, higher than the S&P 500's 18.49X and the sector's 23.41X, reflecting the high capital demands and debt levels [14] Company Highlights - O'Reilly Automotive has achieved 32 consecutive years of record revenue growth, driven by aggressive store expansion and a strong distribution network, with plans to enhance inventory levels [19] - O'Reilly's Zacks Consensus Estimate for 2025 EPS and sales indicates year-over-year growth of 8% and 6%, respectively, with further growth projected for 2026 [20] - Advance Auto Parts has strengthened its liquidity through the sale of its Worldpac business for $1.5 billion, allowing a renewed focus on core operations and efficiency improvements [23] - Advance Auto's Zacks Consensus Estimate for 2025 EPS implies a significant year-over-year growth of 725%, with continued growth expected in 2026 [24]

Core Viewpoint - Analysts project O'Reilly Automotive (ORLY) will report quarterly earnings of $0.83 per share, a 9.2% increase year over year, with revenues expected to reach $4.7 billion, up 7.6% from the same quarter last year [1]. Earnings Projections - The consensus EPS estimate has been revised down by 0.4% in the past 30 days, reflecting a reassessment by covering analysts [2]. - Changes in earnings projections are crucial for predicting investor reactions, as empirical studies show a strong correlation between earnings estimate trends and short-term stock price movements [3]. Key Metrics Estimates - Sales to Do-It-Yourself Customers are expected to reach $2.37 billion, indicating a 6.8% increase from the prior year [5]. - Other sales and sales adjustments are projected at $119.61 million, reflecting a 2.7% increase year over year [5]. - Sales to professional service provider customers are estimated at $2.22 billion, suggesting a 9.5% year-over-year change [5]. Store and Square Footage Estimates - Total square footage is expected to be 50 million square feet, up from 48 million square feet in the same quarter last year [6]. - The total number of stores is projected to reach 6,534, compared to 6,291 a year ago [6]. - The ending domestic store count is anticipated to be 6,402, an increase from 6,187 in the same quarter last year [6]. Additional Store Metrics - The number of stores opened is likely to be 47, consistent with the previous year's figure [7]. - The ending Canada store count is expected to remain at 26, unchanged from the prior year [7]. - Domestic new stores opened are projected at 40, up from 35 a year ago [8]. - Mexico stores at the end of the period are estimated at 107, compared to 78 last year [8]. - Sales per weighted-average square foot are expected to reach $93.73 million, up from $89.17 million year over year [8]. Overall Performance - O'Reilly Automotive shares have shown a return of -2.4% over the past month, while the Zacks S&P 500 composite has increased by 0.7% [9]. - With a Zacks Rank 4 (Sell), ORLY is expected to underperform the overall market in the near future [9].

Group 1 - Publicly traded companies issue shares for various reasons, including raising capital through initial public offerings (IPOs) and secondary offerings [1] - Companies may also initiate stock splits, which do not raise money but change the number of shares and their value, maintaining overall valuation [2] - Stock splits are often executed after significant price increases, as seen with O'Reilly Automotive and Coca-Cola Consolidated, which have risen 497% and 473% over the last decade [3] Group 2 - O'Reilly Automotive operates approximately 6,500 retail stores in North America, focusing on maintenance and repair of used vehicles, achieving operating margins of 19% [5] - Analysts at TD Cowen have set a price target of $125 per share for O'Reilly, indicating a potential upside of about 21% within a one-year outlook [6] - O'Reilly is enhancing earnings per share (EPS) growth through stock buybacks, while Coca-Cola Consolidated is investing in manufacturing facilities to improve profit margins [7]

Core Insights - O'Reilly Auto Parts (ORLY) has been a strong long-term investment for Right Tail Capital, demonstrating resilience and growth despite market challenges [3][4][12] - The company has a balanced customer mix of "Do It Yourself" (DIY) and "Do It For Me" (DIFM), which positions it well against competitors like AutoZone and Advance Auto Parts [7][14] - O'Reilly's distribution advantages and strong company culture contribute to its competitive edge, allowing it to provide superior service that e-commerce platforms struggle to replicate [9][13] Historical Performance - In 2017, ORLY shares fell 30-50% due to fears of Amazon disrupting the auto parts retail market, but the company rebounded significantly, achieving a ~100x return from its IPO price [5][6] - During the COVID-19 pandemic in March 2020, ORLY shares dropped 40-50%, but the company was able to leverage its proven track record to recover and grow [11] Competitive Positioning - O'Reilly has outperformed its peers by effectively navigating supply chain disruptions and maintaining strong relationships with professional mechanics [12][14] - The company's ability to grow its DIFM business faster than AutoZone, despite AutoZone's established presence, highlights O'Reilly's operational excellence [14] Future Outlook - The ongoing need for auto parts, driven by the increasing age and complexity of vehicles, positions O'Reilly for continued growth [15] - Key drivers of O'Reilly's success include a focus on necessary products, disciplined reinvestment, and a customer-first approach [15][16]