Key Highlights

● O'Reilly raised guidance for both revenue and comparable sales.

● Comparable-store sales grew during the quarter.

● Auto-parts retailers are seen as resilient in tough economies.

● Other auto names reported mixed results the same evening.

O'Reilly Automotive shares rose in extended trading on Wednesday, October 28, after the auto-parts retailer lifted its full-year targets for revenue and same-store sales.

O'Reilly Automotive (NASDAQ:ORLY) climbed after the closing bell as investors cheered a quarterly report that showed continued growth in comparable-store sales and an upgraded outlook. The S&P 500 member raised its guidance for both revenue and comparable sales, according to a closing recap.

Steady Demand for Parts

O'Reilly sells auto parts, tools and accessories to do-it-yourself customers and professional repair shops through thousands of stores across the US, Mexico and Canada. Comparable-store sales, which measure growth at locations open at least a year, are the core yardstick for the business.

The company reported comparable sales growth in the quarter. Raising its guidance on both revenue and comparable sales signals management sees that momentum continuing through the rest of the year. Auto-parts retailers have often been viewed as resilient when consumers are stretched: when new and used cars are expensive to buy and finance, drivers tend to keep older vehicles on the road longer, and older vehicles need more repairs.

Rates and the Driver

That dynamic is relevant now. The Federal Reserve left its benchmark rate range unchanged on Wednesday in a 10-2 vote, and market odds of a December increase rose, according to CME FedWatch. Long-dated Treasury yields climbed, with the 10-year pushing past a key psychological threshold.

Higher borrowing costs make car loans pricier. Oil was also in focus, with West Texas Intermediate crude settling at $102.78 a barrel after Yemen's Houthis claimed an attack on a Saudi refinery. Fuel prices affect how much people drive, which in turn shapes the volume of repair work flowing to parts suppliers.

Auto Peers Report

O'Reilly's results landed on a busy evening for the auto sector. Carvana (NYSE:CVNA) rallied in extended trading after posting record revenue and net income, while Ford (NYSE:F) slipped despite an earnings-per-share beat as revenue fell slightly short. Earlier in the regular session, Stellantis (NYSE:STLA) rallied after beating revenue estimates.

The S&P 500 closed at 7,743.98, up 21.38 points, for a third straight gain. After the bell, Microsoft (NASDAQ:MSFT) rose on an earnings beat while Alphabet (NASDAQ:GOOGL) slid after a miss, pulling Nasdaq-100 futures lower.

What to Watch

Investors will look for management commentary on professional versus do-it-yourself demand, pricing and inflation in parts costs, and how the company plans to deliver on its raised targets.

Thursday, October 29, brings the advance estimate of third-quarter GDP and September PCE inflation data at 8:30 a.m. ET, a key read on consumer spending. Mastercard (NYSE:MA), Merck (NYSE:MRK) and Caterpillar (NYSE:CAT) report before the open, and Amazon (NASDAQ:AMZN) reports after the close.