Humble O'Reilly Automotive Continues To Be Unstoppable

Aug.25.14 | About: O'Reilly Automotive, (ORLY)

Summary

O’Reilly Automotive continues to hit new highs.

The company is cites the industry for its success.

I think it’s far more than just the industry. Expect the success to keep going.

I've been watching O'Reilly Automotive (NASDAQ:ORLY) for quite some time, without a position, kicking myself. As I type this it remains just about at all-time highs and with the recent announcement of another increase in its stock buyback program it doesn't look like the stock or the company is ready to quit either.

Remember a few years ago when the recession was in full swing, new car sales were in the dumps, and everybody was riding their old cars longer than usual? Yeah, it made sense that auto part supply chains like O'Reilly would see their own bull market. But I figured that success would cool off when new car sales picked up again. I figured wrong.

On July 23 O'Reilly Automotive reported its latest quarterly results. Sales increased 8% to $1.85 billion. Same-store sales bumped up another 5.1% on top of the 6.5% bump a year ago. Earnings soared 21% to $1.91 per diluted share.

The company is continually adding stores, increasing sales, increasing net income, and funneling cash into stock buybacks. The current buyback authorization was recently raised $500 million more from $4.5 billion to $5 billion. It sounds like we can expect the current quarter to be another blazing hot one.

I guess I should have seen it coming. During the conference call, O'Reilly Automotive credited the success in part with the harsh winter. Remember all those winter storms? Apparently it wasn't too kind on our vehicles and caused a lot more wear and tear than usual.

Still, it's kind of funny. We all see companies that seem to have an excuse each quarter as to why their results were weak, and it's always somebody else's fault. With O'Reilly Automotive, it seems to be the opposite. The company consistently hits out of the park and often humbly credits some of the success with a different "excuse" that acted in its favor. The company said in the call it expects more solid growth in the third quarter due to winter-related repairs.

But then later in the call the company credits areas of strength seen in places like Florida. I don't know about you, but I didn't hear about too many harsh winter storms down there. No doubt the bad Midwest and Northeastern winter storms helped O'Reilly's business, but with growing success seen in other regions I think the company itself is executing far better than just crediting the favorable industry.

Now the $64,000 question - if I'm so bullish then why aren't I long O'Reilly Automotive? That's a question I keep asking myself. Count me in just ahead of the next earnings report if not sooner.

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.