The harsh winter weather appears to have created a pickup in demand at auto parts retailers and service centers.
Sector movers: Pep Boys (PEP) +4.2%, AutoZone (AZO) +5.2%, U.S. Auto Parts (PRTS) +1.2%, LKQ Corporation (LKQ) +3.2%, Genuine Parts (GPC) +3.0%, Monro Muffler (MNRO) +2.7%, Lithia Motors (LAD) +3.8%, Sonic Automotive (SAH) +2.0%.
O'Reilly Automotive (ORLY -6.9%) shares skidded even though the company beat EPS expectations in Q3. However, results were juiced by a $0.09 tax rate effect.
Worrying investors: comparable store sales growth came in at 4.6%, below expectations of 5.4%. J.P. Morgan analyst Christopher Horvers observes, "Despite AZO and AAP both missing same-store-sales forecasts recently and GPC calling out significant weakness in DIY, the market had seemingly absolved ORLY of any complicity and drove the stock to near a 52-week high into the print."
Management's guidance for EPS of $1.27-$1.31 in Q4 is below Street expectations of $1.34. Comparable store sales guidance is for 3%-5% growth in Q4.
Horvers notes that ORLY trades at a premium valuation relative to peers, which suggests "pressure on the stock is likely to be greater than the 3% miss against Street operating income estimates."
O'Reilly Automotive Inc is a specialty retailer of automotive aftermarket parts, tools, supplies, equipment and accessories in the United States, selling its products to both do-it-yourself DIY and professional service provider customers.