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O’Reilly Automotive Inc (ORLY), AutoZone, Inc. (AZO), The Pep Boys – Manny, Moe & Jack (PBY): These Auto-Parts Retailers Are Running at Full Throttle

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AutoZone Needs a Tune UpWith the U.S. economic recovery continuing, auto-parts retailers have seen strong demand from their customers. These companies have had a good run over the past several years and are trading near their 52-week highs. The uptrend looks set to continue as auto-parts retailers grow market share and improve their businesses.

A family business

O’Reilly Automotive Inc (NASDAQ:ORLY) has been in business since 1957 when the O’Reilly family opened its first store in Springfield, Mo. Today the company has over 4,000 stories in 42 states. O’Reilly Automotive Inc (NASDAQ:ORLY) is one of the largest specialty automotive retailers of aftermarket parts, tools, supplies, equipment and accessories. The company serves professional service providers as well as do-it-yourself customers.

O’Reilly Automotive Inc (NASDAQ:ORLY) just posted impressive second-quarter numbers. Earnings increased 37% to $1.58 per share. This marked the 18th consecutive quarter of 15% or more in earnings-per-share growth. Comparable-store sales increased 6.5% in the second quarter. Overall, the operating margin increased 170 basis points to 17.3%. Sales increased 10% to $1.7 billion. During the quarter, the company repurchased $274 million in shares.

Going forward, O’Reilly Automotive Inc (NASDAQ:ORLY) is getting set to roll out its card-loyalty program to do-it-yourself customers. This will allow the company to accumulate a customer’s purchase history and target them with promotions based on their past purchases. The complete roll-out is expected by year-end.

Furthermore, the company is integrating its acquisition of VIP Auto Parts in Maine, New Hampshire and Massachusetts. The acquisition gave O’Reilly 56 stores in the critical Northeast market and sets the company up for further expansion in this lucrative market. The stores won’t have an impact on results for this year, but will starting in 2014.

Outside of the Northeast, O’Reilly Automotive Inc (NASDAQ:ORLY) is focused on expanding in California, Chicago and Florida. To do so, it has added distribution centers to fuel growth in these markets. The company is on track to open 190 net new locations this year.

Eddie Lampert’s favorite auto retailer

AutoZone, Inc. (NYSE:AZO) has been a major holding for billionaire Eddie Lampert for several years. AutoZone, Inc. (NYSE:AZO) is the largest auto-parts retailer with more than 5,000 stores in the U.S., Puerto Rico and Mexico. Each store carries a full line of parts for cars, SUVs, vans and light trucks. The company’s first store was opened in 1979 in Forrest City, Ark.

In its most recent quarter, net sales increased 4.5% to $2.2 billion from the prior year. Earnings increased 15.8% to $7.27 per share. This quarter marked the 27th consecutive quarter of double-digit earnings growth. Same-store sales decreased 0.1% in the quarter. The gross margin for the quarter was 51.8%. During the quarter, AutoZone, Inc. (NYSE:AZO) repurchased $325 million in shares. The company opened 33 new stores in the quarter, relocated three stores, closed one store in the U.S. and opened seven new stores in Mexico.

Going forward, AutoZone, Inc. (NYSE:AZO) just increased its share-repurchase program by an additional $750 million. This continues its trend of being a shareholder-friendly organization. Since 1998, AutoZone has authorized $13.4 billion in share repurchases.

AutoZone, Inc. (NYSE:AZO) is focusing on is its e-commerce business, an attractive area for growth. It just purchased AutoAnything in the second quarter of this fiscal year. AutoAnything’s e-commerce site helped boost e-commerce sales 79.9% in the most recent quarter compared to last year. Overall, e-commerce sales account for only 3.5% of total sales. AutoZone sees its e-commerce business as a complement to its walk-in stores where customers can research purchases prior to coming to the store or have the products delivered directly to their doorstep. AutoZone, Inc. (NYSE:AZO) sees plenty of room for growth in its e-commerce initiatives.

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