O'Reilly shares rise on strong 4Q, guidance

O'Reilly Automotive shares get a boost from strong 4th-qtr profit, 2013 guidance

Associated Press

NEW YORK (AP) -- O'Reilly Automotive Inc. shares jumped Thursday, after the auto parts retailer reported better-than-expected fourth-quarter profit and issued better-than-expected guidance for the current year.

THE SPARK: O'Reilly posted an adjusted profit of $1.14 per share for the recent quarter, while analysts polled by FactSet expected $1.08 per share. Revenue rose 7 percent to $1.49 billion, coming in slightly ahead of Wall Street predictions of $1.48 billion.

The company projected a 2013 profit of $5.57 to $5.67 per share on $6.6 billion to $6.7 billion in revenue, better than the $5.42 per share and $6.58 billion in revenue than analysts expected.

THE BIG PICTURE: Springfield, Mo.-based O'Reilly credited the strong fourth-quarter results to better-than-expected revenue at stores open at least a year. The metric rose 4.2 percent for the period, beating the company's projections for an increase of 2 to 4 percent. The figure is a key measure of a retailer's health, because it excludes stores that recently opened or closed.

For 2013, O'Reilly expects revenue at stores open at least a year to rise 3 to 5 percent.

The company estimates first-quarter revenue at stores open at least a year to be flat to up 2 percent, largely as a result of the loss of a day compared with the 2012 leap year and an earlier Easter holiday.

But O'Reilly noted that sales in the first few weeks of the quarter have been strong and projected first-quarter profit of $1.30 to $1.34 per share, while analysts expect $1.31 per share.

THE ANALYSIS: Stifel Nicolaus analyst David Schick reiterated his "Buy" rating for the stock, saying that the company's sales gains are even more impressive given the relatively mild winter weather so far this year, which has reduced demand for vehicle parts.

Citi analyst Kate McShane kept a "Neutral" rating for the stock, noting that its share price is above her $90 price target. She pointed to rival AutoZone Inc. as a better pick in the sector, citing its value-boosting stock buyback activities and better earnings growth potential.

THE SHARES: Up $7.46, or 8.1 percent, to $100.05 in afternoon trading after peaking at $102.75 earlier in the session. Over the past 52 weeks, the company's shares have traded between $75.61 and $107.13.

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