Financial Performance - Third quarter revenue increased by $341 million, or 8%, to $4.71 billion compared to $4.36 billion in the same period last year[2] - Gross profit for the third quarter rose 8% to $2.44 billion, representing 51.9% of sales, up from 51.6% a year ago[2] - Net income for the third quarter increased by $60 million, or 9%, to $726 million, which is 15.4% of sales[3] - Diluted earnings per share for the third quarter increased by 12% to $0.85, adjusted for a 15-for-1 stock split[3] - Year-to-date sales increased by $755 million, or 6%, to $13.37 billion compared to $12.61 billion for the same period last year[4] - Net income for the nine months ended September 30, 2025, was $1,932,976, compared to $1,835,550 in 2024, representing an increase of 5.3%[23] - Earnings per share for the nine months ended September 30, 2025, was $2.26, up from $2.09 in 2024, indicating an increase of 8.1%[22] - The company reported GAAP net income of $2,484,106 thousand for the twelve months ended September 30, 2025, compared to $2,388,054 thousand in 2024[25] Sales and Store Performance - Comparable store sales grew by 5.6% in the third quarter, following a 1.5% increase in the same period last year[8] - The company raised its full-year 2025 comparable store sales guidance to a range of 4.0% to 5.0%[4] - Total sales for the three months ended September 30, 2025, reached $4,705,696, an increase of 7.8% compared to $4,364,437 for the same period in 2024[22] - Sales to do-it-yourself customers rose to $2,304,804 thousand in Q3 2025, up from $2,219,727 thousand in Q3 2024, while sales to professional service provider customers increased to $2,307,782 thousand from $2,043,394 thousand[26] - The company opened 141 new stores in the nine months ended September 30, 2025, compared to 92 in the same period of 2024, bringing the total domestic store count to 6,406[26] Cash Flow and Guidance - Free cash flow guidance for 2025 is set between $1.5 billion and $1.8 billion[11] - The company repurchased 4.3 million shares at an average price of $98.08 during the third quarter, totaling $420 million[9] - The updated guidance for total revenue for 2025 is projected to be between $17.6 billion and $17.8 billion[10] - The company reported a net cash provided by operating activities of $2,128,501 for the nine months ended September 30, 2025, compared to $2,425,089 in 2024[23] - Free cash flow for the nine months ended September 30, 2025, was $1,201,004 thousand, down from $1,657,129 thousand in 2024[25] Assets and Liabilities - Cash and cash equivalents increased to $204,513 as of September 30, 2025, from $115,613 a year earlier, marking a growth of 76.7%[23] - Total assets as of September 30, 2025, amounted to $16,279,627, a rise of 11.7% from $14,577,522 in 2024[20] - Total current liabilities increased to $8,709,759 as of September 30, 2025, compared to $8,185,165 in 2024, reflecting a growth of 6.4%[20] - The total shareholders' deficit improved to $(894,676) as of September 30, 2025, from $(1,439,064) in 2024, indicating a reduction of 37.9%[20] Operational Efficiency - Operating income for the three months ended September 30, 2025, was $976,067, an increase of 8.8% from $896,728 in the same period of 2024[22] - Average inventory per store rose to $858 thousand in 2025 from $781 thousand in 2024, indicating a 9.9% increase[25] - The inventory turnover ratio decreased to 1.6 in 2025 from 1.7 in 2024, suggesting a slight decline in inventory management efficiency[25] - Total lease cost per ASC 842 for the twelve months ended September 30, 2025, was $581,898 thousand, compared to $530,689 thousand in 2024[25] - Adjusted debt increased to $8,990,839 thousand in 2025 from $8,182,230 thousand in 2024, resulting in an adjusted debt to EBITDAR ratio of 2.04 compared to 1.96 in the previous year[25]

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]

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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]