ORLY's Earnings Preview: Revving Up for a Strong Finish to FY23

As we gear up for O'Reilly Auto's (ORLY) Q4 earnings release today, the anticipation is high among investors keen to assess the automotive aftermarket parts retailer's performance. This earnings preview will navigate through ORLY's projected financials, its growth trajectory, and its standing in the competitive landscape, shedding light on what this might mean for investors.

Earnings Expectations:

ORLY is expected to showcase a robust Q4, with projections pointing towards:

- Adjusted EPS at $9.16, marking a 9% year-over-year increase

- Revenue anticipated at $3.86 billion, showing a 6% year-over-year growth

With a streak of surpassing earnings estimates for five consecutive quarters and demonstrating substantial revenue growth, ORLY has shown particular strength in its Professional business, with notable gains in the DIY segment's market share.

Growth Prospects:

ORLY's outlook remains bullish with same-store sales growth forecasts adjusted to +7-8% for FY2023, signaling sustained product demand. While inflation has buoyed average ticket growth, ORLY is optimistic about achieving organic growth through the increasing complexity of auto parts.

The aftermarket auto parts industry continues to benefit from factors like the recovery in miles driven and the aging vehicle fleet. Yet, the slowing pace of price increases may diminish this as a growth driver moving forward.

Investment Value and Market Position:

With shares surging 22% since late October and hitting all-time highs, ORLY presents both an attractive growth story and a cautionary tale of potential profit-taking post-earnings. With a market cap of $62.23 billion and trading at a forward P/E ratio of 24.39, ORLY's valuation surpasses the S&P 500's average, highlighting its premium market position.

Conclusion:

O'Reilly Auto stands at a pivotal point, with Q4 earnings poised to reflect its resilience and strategic positioning in the automotive aftermarket sector. While its growth prospects and market dominance paint a promising picture, investors should weigh the stock's recent appreciation and potential for profit-taking. As ORLY unveils its latest financial chapter, its commitment to expansion and organic growth will be key focal points for assessing its long-term investment value.

$ORLY(ORLY)