A month has gone by since the last earnings report for O'Reilly Automotive (ORLY). Shares have added about 6.7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is O'Reilly Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

O'Reilly Q4 Earnings Beat Estimates, Sales Miss

O’Reilly reported fourth-quarter 2023 adjusted earnings per share of $9.26, beating the Zacks Consensus Estimate of $9.07. The bottom line increased from $8.37 per share in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $3,832 million, marginally missing the Zacks Consensus Estimate of $3,838 million. The top line, however, increased 5.2% year over year.

During the quarter, comparable store sales grew 3.4%. The company opened 47 new stores in the United States and Mexico. The total store count was 6,157 as of Dec 31, 2023.

Financials, Share Repurchase & Costs

In the reported quarter, selling, general and administrative expenses flared up 6.6% year over year to $1.25 billion. Operating income rose to $718.7 million from $682.2 million generated in the year-ago period. Net income was roughly $552.5 million, up from $528.6 million in the year-ago quarter.

During the reported quarter, O’Reilly repurchased 0.6 million shares for $560 million at an average price of $922.86 per share. After the end of the quarter until the release date, ORLY repurchased an additional 0.1 million shares of common stock for a total investment of $102 million at an average price of $967.63 per share. As of Feb 7, the company had nearly $2.47 billion remaining under the current share repurchase authorization.

It had cash and cash equivalents of $279.1 million at the end of the reported quarter, up from $108.6 million recorded as of 2022-end. Its long-term debt was $5.57 billion, higher than $4.37 billion as of Dec 31, 2022.

During the reported quarter, O’Reilly generated $516.4 million in cash from operating activities, down from the year-ago period’s $795.2 million. Capital expenditures totaled $252.3 million, rising from $174.5 million in the year-ago period. Free cash flow came in at $256 million, indicating a decline of 40% year over year.

2024 Outlook

For 2024, O’Reilly envisions total revenues in the range of $16.8-$17.1 billion, up from $15.8 billion reported in 2023. Earnings per share are expected in the range of $41.05-$41.55, up from $38.47 reported in 2023. The comparable store sales growth is expected between 3% and 5%. Free cash flow is projected in the band of $1.8-$2.1 billion. Capital expenditures are expected between $900 million and $1 billion. The company intends to open 190-200 stores this year.