O’Reilly Automotive (ORLY) showed a 111% rise in profits to $87 million in the third quarter of the year from $41 million in the same period of 2008. On an adjusted earnings per share basis, profits soared 58% to 63 cents per share, above the Zacks Consensus Estimate of 56 cents per share.

Sales for the quarter elevated 13% to $1.26 billion. Gross profit increased 20% to $611 million (or 48.5% of sales) from $507 million (or 45.6% of sales) in the third quarter of 2008. The company attributed the results to the solid consolidated comparable store sales experienced during the quarter as well as continued improvement in gross margin backed by improved purchasing power.

O’Reilly opened as many as 32 stores in 16 states during the quarter. This increased the total store count to 3,415 stores at the quarter end. Year-to-date, the company opened 140 stores, reaching close to the annual target of 150 new store openings for the year.

Financial Position
O’Reilly had cash and cash equivalents of $29.5 million as on Sep 30, 2009. Long-term debt amounted to $704 million as on that date. Long-term debt to capitalization ratio stood at 21%.

In the first nine months of 2009, net cash flow from operating activities remained flat at $289 million. Capital expenditures increased to $317 million in the above period from $260 million in the same period a year ago.

Outlook
O’Reilly anticipated earnings per share for the upcoming quarter to range from 47 cents to 51 cents. The adjusted earnings per share are expected in the range of $2.21–$2.25, higher than the Zacks Consensus Estimate of $2.12.

We recommend the shares of O’Reilly as Neutral.

Zacks Investment Research
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