(ORLY) O’Reilly Automotive Inc. – Momentum – Zacks Rank Buy

August 3rd, 2009

O’Reilly Automotive Inc. (ORLY) reported strong second-quarter results on July 29 that were better than expected, sending its share price above a key level of short-term resistance.

Second-Quarter Results

Sales were up a whopping 78% from last year to $1.25 billion, largely due to the company’s acquisition of CSK Auto. Earnings came in at 63, 8 cents ahead of the Zacks Consensus Estimate.

In spite of the general economic contraction, OReilly noted that is opened 50 new stores during the quarter, while same-store sales, a key retail metric, were up 4.8% from last year.

Estimates Jump

After the solid quarter, analysts boosted their earnings projections, with the current year adding 15 cents and climbing to $2.12 per share. The next-year estimate is pegged at $2.42, a 14% earnings growth projection.

Valuation

Based upon the current-year estimate, this stock has a P/E multiple of 19X, a premium to the overall market.

The Chart

Shares of ORLY have been rallying since October of last year, advancing from just above $20 to a recent high above $43. Shares recently broke above a short-term level of resistance, take a look below.


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