A Closer Look at O’Reilly Automotive’s Profit Margins in Q2 2018


Nov. 20 2020, Updated 5:09 p.m. ET

O’Reilly Automotive’s Q2 2018 results

Previously, we looked at O’Reilly Automotive’s (ORLY) second-quarter revenue. The company managed to report a 7.2% increase in its revenue, and its comparable-store sales growth rate also significantly improved. ORLY opened 54 new stores during the second quarter. This was a part of the company’s plan to open 200 new stores in fiscal 2018, which should help the company to expand its consumer base. In the first half of 2018, O’Reilly has already opened 128 new stores. Now, let’s move on by looking at O’Reilly Automotive’s profit margins in the second quarter.

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ORLY’s Q2 2018 profit margins

In the second quarter, ORLY’s gross profit stood at $1.29 billion, about 7% higher than $1.20 billion in the second quarter of 2017. With this rise, the company’s gross profit margin marginally expanded to 52.5% in the second quarter from 52.4% in the second quarter of 2017.

O’Reilly Automotive’s operating profit rose by 5% YoY (year-over-year) to $479 million with an operating profit margin of 19.5% in the second quarter. This operating profit margin was slightly lower than 20.0% in the second quarter of 2017 but slightly better than the 18.5% reported in the previous quarter.

What to expect in Q3 2018

According to Wall Street analysts’ consensus estimates, O’Reilly’s operating profit margin was at 19.4% in the third quarter, which was slightly lower than its operating margin of 19.7% in the third quarter of 2017.

According to ORLY’s fiscal 2018 guidance, its gross profit margins should remain in a range of 52.5% to 53.0%, and its operating profit margin will be between 18.5% to 19.0%.

Interestingly, the gross profit margins of auto part retailers including O’Reilly Automotive are much higher than major auto manufacturers (IYK) like General Motors (GM), Ford (F), and Fiat Chrysler (FCAU). Higher fixed costs involved in the car manufacturing business are one of the key factors that hurt these automakers’ profitability.

Please visit Market Realist’s Autos page to see how these automakers fared in Q2 2018.


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