7. O’Reilly Automotive Inc. (NASDAQ:ORLY)
Share Price as of August 30: $1,138.47
Number of Hedge Fund Holders: 52
O’Reilly Automotive Inc. (NASDAQ:ORLY) is an automotive parts retailer that provides aftermarket parts, tools, supplies, equipment, and accessories to professional service providers and DIY customers. It’s known for its customer-focused approach and extensive product knowledge and has a team of over 91,000 hard-working professional parts people across North America.
The company has a history of 3 stock splits. Considering a high share price currently that resulted from a 19.54% rise in just 1 year, such an action can be expected from O’Reilly Automotive Inc. (NASDAQ:ORLY) again.
The second quarter began with sluggish sales in April and May due to cool/wet weather, reflected in industry-wide pressure. However, sales trends improved in June, driven by strong performance in hot weather-related categories. June represented the strongest performance for Q2, with similar results in July.
This brought a revenue of $4.27 billion, which was below street expectations but was still up by 4.99% from the previous year. The earnings per share were at $10.55. The company also repurchased 784,000 shares at an average price of $1,012, totaling $794 million.
Despite falling short of sales expectations, customer satisfaction resulted in a 2.3% comparable store sales increase, building upon the 9% growth achieved in the previous year. This is also why investor trust remains strong. As of June 30, 52 hedge funds held stakes in the company. Akre Capital Management had the biggest one at $1,009,676,789.
Performance at O’Reilly Automotive Inc. (NASDAQ:ORLY) is driven by increased ticket counts and excellent customer service. It opened 27 stores in Q2 and remains on track to open a total of 190-200 new stores in 2024.
Still, it lowered its full-year sales guidance due to economic uncertainty but remains confident in long-term demand for automotive aftermarket products. Its focus on customer service and market share gains will drive future growth.
Andvari Associates stated the following regarding O’Reilly Automotive, Inc. (NASDAQ:ORLY) in its Q2 2024 investor letter:
“O’Reilly Automotive, Inc. (NASDAQ:ORLY) is the third largest auto parts retailer in the country with over 6,095 stores in North America and Mexico. Their sales are split 60% to people who want to repair their own car and 40% to professionals who fix and maintain cars for a living. Following the common theme, O’Reilly sells essential products that people will buy regardless of the state of the economy.
We love that this business gushes cash—it had an extraordinary return on invested capital of 43.7% in 2023. O’Reilly has also had negative working capital since 2017, which means customers pay O’Reilly before O’Reilly needs to pay its suppliers. Looking at its capex, O’Reilly does have a higher capex ratio when compared to the others in the table. However, the ratio is still quite low considering O’Reilly is growing its store count in the range of 150-200 per year. At this rate, O’Reilly is expanding its store count by about 3% annually. Also driving the recent increase in capex has been a shift towards owning their stores rather than leasing them.”
