Market Overview

AutoZone and O'Reilly Automotive to Open Near 52-Week Highs


At the end of last week, auto parts and accessories retailers AutoZone (NYSE: AZO) and O'Reilly Automotive (NASDAQ: ORLY) reached new multiyear highs of $332.93 and $71.70 per share, respectively.

AutoZone is expected to report this week that its fiscal fourth-quarter earnings rose 18.8% from a year ago while revenues grew 6.7%. Oppenheimer upgraded the stock to outperform about a month ago. The Memphis-based company has more than 4,500 stores throughout North America and also markets products through its website. AutoZone has a market cap of $13.8 billion.

Per-share earnings are forecast to grow 15.5% over the next five years, which is better than the industry average. The forward earnings multiple is 14.9 and the PEG ratio is 1.1. AutoZone's share price is about 26% higher than six months ago. The stock has outperformed competitors Advance Auto Parts (NYSE: AAP) and Genuine Parts (NYSE: GPC) year to date.

O'Reilly announced in August it would buy back an additional $500 million in shares, and last week it made a $300 million note offering. O'Reilly also recently paid a $20.9 million settlement related to a fraud probe of its CSK Auto subsidiary. Springfield, Mo.-based O'Reilly Automotive operates more than 3,600 stores and has a market cap of $9.7 billion. It was founded in 1957.

The long-range EPS growth forecast is 16.5%, which leads the industry. The return on equity is 15.1%. O'Reilly's share price has risen more than 28% in the past six months and is about 37% higher than a year ago. The stock has also outperformed competitors Advance Auto Parts and Genuine Parts since the beginning of the year.


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