O’Reilly (ORLY) Shares Down on Weak Comparable Sales Outlook

O’Reilly Automotive Inc. (NASDAQ:ORLY) officially stepped into the auto parts business in 1957. It currently sells a range of new and remanufactured automobile parts and accessories. The company mainly makes money by offering maintenance services and selling repair parts to car owners.

The most vital metric for O’Reilly’s success is the average miles driven in the U.S. However, the metric stayed low for the most part of 2020 due to lockdown restrictions in place. This is one of the reasons behind ORLY stock’s stagnant growth during the last year.

Nevertheless, O’Reilly on Wednesday announced better-than-expected financial results for the fourth quarter. The company reported a profit of $5.40 per share for the three months ended Dec. 31, versus $4.25 per share in the comparable period of 2019. Analysts on average were expecting O’Reilly to report earnings of $5.14 per share.

Revenue increased 14 percent on a year-over-year basis to $2.83 billion, beating the consensus forecast of $2.78 billion. Same-store sales also rose 11 percent on a year-over-year basis, as customers continued to spend money on repairing their cars during the pandemic.

However, CEO Greg Johnson warned about uncertainties the company can face this year. He said in a statement, “We have seen a strong start to the year, with the continuation of robust sales volumes through the month of January, but we remain cautious as we plan for the coming year in light of the continued significant uncertainty related to the ongoing impact of the pandemic and the difficult comparisons we will face beginning in April, as we lap the surge of volume we experienced in 2020. As a result, our expectation is that comparable store sales will be in the range of down 2% to flat, versus 2020, but well above our historical trends on a two-year stack basis.”

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O’Reilly shares fell nearly 5 percent on Thursday following his comments that overshadowed the strong results for the fourth quarter.