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Why O’Reilly Automotive Stock Fell despite Solid Q3 2018

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Nov. 20 2020, Updated 10:52 a.m. ET

O’Reilly Automotive’s Q3 2018 earnings

O’Reilly Automotive (ORLY), one of the biggest US auto parts retailers, released its third-quarter of 2018 earnings on October 24. Its earnings call was on October 25. Diluted EPS came in at $4.50, which was 39.8% higher than $3.22 in the third quarter of 2017.

Its third-quarter earnings were higher than Wall Street analysts’ estimate of $4.30. Let’s see how the market reacted to its third-quarter results.

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Investors’ negative reaction

On October 24, the day of O’Reilly Automotive’s third-quarter earnings release, ORLY stock fell 5.1% to $322.83. In the next session, on October 25, it had a minor recovery of 0.5% to $324.55. Despite the company’s higher-than-estimated third-quarter earnings and positive comparable-store sales growth, its expectations of slightly lower sales in the fourth quarter could have marred investor confidence. On October 24, the broader market sell-off also pressured ORLY stock, with the S&P 500 index falling 3.1%.

As of October 25, ORLY stock has delivered a positive return of 34.9% YTD (year-to-date). That’s better than 9.7% YTD gains for the Nasdaq Index.

The YTD performance of O’Reilly’s direct peer AutoZone (AZO) has also been positive, with the stock rising 4%. Advance Auto Parts (AAP) has risen 63.7% YTD.

Automakers (XLY) Ford Motor Company (F) and Tesla (TSLA) released their third-quarter earnings on October 24. Read Digging Deeper into Ford’s Q3 2018 Earnings Results and Tesla Investors Celebrate: Musk Kept Profitability Promise in Q3 to learn more.

Series overview

In this series, we’ll take a close look at some key factors that drove O’Reilly Automotive’s third-quarter results. We’ll also see how the company has been doing in terms of revenue, comparable store sales growth, and profitability.

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