O'Reilly Automotive, Inc. (ORLY) Earnings & Analysis

Latest quarter

O’Reilly reported Q2 FY2026 revenue of $4.9 billion, up 8.11% from Q2 FY2025, and said revenue exceeded the consensus by 0.77%. The company reported adjusted EPS, as the consensus counts it, of $0.86, exceeding the consensus by 1.18%; filing results also show diluted EPS of $0.86, up 10.3% from a year earlier.

The filing said sales growth reflected a 6.0% increase in domestic comparable-store sales and a $100 million contribution from stores opened in 2025 and 2026 that were not yet in the comparable base. O’Reilly said professional comparable sales grew about 10%, while DIY comparable sales rose in the low single digits as average-ticket gains were partly offset by lower transaction counts. The filing reported gross margin of 51.4%, unchanged from a year earlier, and operating margin of 20.2%, down −0.1 percentage points. O’Reilly reported free cash flow of $702.5 million, up 53.8% from Q2 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Executive Officer Brad Beckham said second-quarter comparable-store sales surpassed the company’s expectations, supported by professional and DIY demand. Beckham said average-ticket growth drove the low-single-digit DIY comparable-sales increase, while DIY transaction counts declined by low single digits and were affected in part by hot-weather categories. He said professional comparable sales increased about 10%, with growth split fairly evenly between average-ticket value and ticket-count growth; he added that the company does not quantify those components quarterly.

Beckham said favorable spring weather supported sales exiting the first quarter and that sales moderated to a consistent pace in May and June. He said the company had not seen the usual seasonal increase in hot-weather-related demand by late June, but had seen a step-up in sales early in July as summer conditions arrived across its markets. Beckham said the updated outlook retains unchanged expectations for comparable-sales growth in the second half because the company does not want to assume weather-driven demand will persist.

On pricing, Beckham said the company expects the same-SKU inflation benefit to moderate to 1% to 2% in the second half as it laps 2025 tariff-driven price increases. He said the company had passed through some incremental price increases during 2026, principally due to higher crude-oil costs, while remaining cautious about the duration of those benefits and the effects of economic pressure on customers.

Chief Financial Officer Jeremy Fletcher said free-cash-flow growth in the first half reflected operating-income growth and the timing of renewable-energy-credit payments. Fletcher said the company intends to move prudently toward an adjusted debt-to-EBITDA target of 2.5× and reported $3.1 billion of year-to-date share repurchases through the earnings-release date. Beckham said capital allocation first prioritizes investment in the existing store and distribution network and organic store openings, with repurchases following those investments.

In analyst questions, Fletcher said freight and acquisition-cost pressures had been rational and stable, and that the company addresses inflation and acquisition costs through its pricing approach to maintain gross-margin rate. Beckham said staffing and payroll investment is evaluated continuously to support customer service and sales. Beckham also said O’Reilly has no expectation or intention to pursue a large transformative acquisition in the foreseeable future.

Guidance

O’Reilly raised its FY2026 comparable-store-sales growth outlook to 4% to 6% from 3% to 5%. Beckham said the company increased FY2026 diluted EPS guidance to $3.20 to $3.30 from $3.15 to $3.25. Fletcher said O’Reilly now expects FY2026 revenue of $18.9 billion to $19.2 billion, compared with its earlier outlook of $18.7 billion to $19.0 billion.