Key Highlights

  • O'Reilly closed up 3.6% at $85.82 on Sep. 22 (intraday high $87.02) after AutoZone posted fiscal Q4 EPS of $56.05 versus a $54.30 consensus.
  • AutoZone's $6.6 billion in sales missed estimates, but its CEO said sales strengthened over the final eight weeks of the quarter.
  • O'Reilly's own Q2 showed 6.0% comparable store sales growth and EPS up 10%, and it raised full-year comp guidance to 4% to 6% with EPS of $3.20 to $3.30.
  • O'Reilly repurchased $1.51 billion of stock in the second quarter at an average of $90.40 per share, plus another $632 million at $86.81, leaving about $1.33 billion under its authorization.

O'Reilly Automotive (NASDAQ:ORLY) shares rose on Sep. 22 because investors read AutoZone's fiscal fourth-quarter report as a sign that Demand across the auto parts aftermarket is holding up. O'Reilly released no news of its own that day. Instead, the stock moved with its closest peers after AutoZone (NYSE:AZO) reported Earnings Per Share of $56.05, above the $54.30 analyst consensus, even as its $6.6 billion in sales fell short of the $6.71 billion expected.

O'Reilly closed at $85.82, up 3.6%, after trading as high as $87.02 during the session. The stock had fallen 2.2% the day before. AutoZone rose about 6% and Advance Auto Parts (NYSE:AAP) gained about 6%, while broader consumer discretionary benchmarks were roughly flat. That pattern points to a group-specific move rather than a broad rally in consumer stocks.

The part of AutoZone's report that likely mattered most for O'Reilly was management's tone. AutoZone Chief Executive Phil Daniele said sales strengthened over the final eight weeks of the quarter after a difficult first eight weeks. He added that the company feels well positioned for sales growth in fiscal 2027.

What AutoZone Actually Reported

AutoZone's Sep. 22 release covered the 16 weeks ended Aug. 29. Net sales rose 5.6% to $6.6 billion, and total company same-store sales rose 2.7%, or 1.5% at constant currency. Domestic same-store sales grew 1.6%, while international same-store sales rose 10.7% as reported but only 1.3% at constant currency.

Profitability was stronger than sales. Gross Margin rose 182 basis points to 53.3%, helped by a 145-basis-point benefit from Tariff refunds and a 105-basis-point net non-cash LIFO impact, partly offset by a higher mix of commercial sales. Operating expenses rose to 33.4% of sales from 32.4%, reflecting growth investments. Operating profit increased 10.1% to $1.3 billion, and EPS rose from $48.71 a year earlier.

For fiscal 2026, AutoZone's sales rose 7.4% to $20.3 billion and EPS rose 5.3% to $152.55. The company opened 175 stores in the quarter and said it expects sales in each of its three countries to accelerate in the new fiscal year. It also said it believes it continued to gain share.

O'Reilly's Own Numbers Tell a Stronger Story

O'Reilly's latest results, released on July 29, show faster growth than AutoZone's domestic business. Second-quarter sales rose 8% to $4.89 billion, and comparable store sales rose 6.0% on top of 4.1% a year earlier. Operating Income rose 8% to $986 million, a steady 20.2% of sales, and diluted EPS rose 10% to $0.86. The stock's per-share figures reflect a 15-for-1 split completed in 2025.

For the first half, sales rose 9% to $9.45 billion, comparable store sales rose 7.0% and EPS rose 13% to $1.58. Chief Executive Brad Beckham said the company delivered solid growth in both professional and do-it-yourself customers. The company raised full-year comparable store sales guidance to 4% to 6%.

O'Reilly's updated 2026 guidance calls for total Revenue of $18.9 billion to $19.2 billion, Operating Margin of 19.3% to 19.8% and diluted EPS of $3.20 to $3.30. It expects free Cash Flow of $1.8 billion to $2.1 billion after Capital spending of $1.3 billion to $1.4 billion. The company also plans 225 to 235 net new stores in 2026 and had opened 110 by the time of the July report.

Buybacks remain a major lever. O'Reilly repurchased $1.51 billion of stock in the second quarter at an average of $90.40 per share. It bought another $632 million at $86.81 between the end of the quarter and the July release, leaving about $1.33 billion under its authorization.

Why Peer Results Move the Group

Investors often trade the major auto parts retailers as a group because they share the same demand drivers. These include miles driven, the age of the vehicle fleet, the weather and the health of professional repair shops. When one reports, the others tend to move in sympathy. The biggest read-across is usually in commercial sales to professional installers, where the three compete directly. AutoZone's release said a higher mix of commercial sales partly offset its gross margin gains, which suggests professional customers are making up a larger share of its sales. O'Reilly describes its own approach as a dual market strategy serving both professional and do-it-yourself customers, so strength in commercial demand is directly relevant to its outlook.

AutoZone's mixed quarter offered something for both sides of that argument. The profit beat and improving trend in the final weeks supported the view that aftermarket demand is steady. The revenue miss and modest domestic same-store sales growth were a reminder that growth has slowed from earlier levels. O'Reilly's 6.0% second-quarter comparable sales growth compares favorably, which may explain why investors were willing to add to the stock on a positive industry signal.

Risks to Keep in Mind

Sympathy moves can reverse quickly, because they rest on another company's data rather than new information about O'Reilly. AutoZone's comments about a difficult start to its quarter show that demand can be uneven from month to month. Tariffs on imported parts remain a cost and pricing variable for the whole industry. Some of AutoZone's margin gain also came from one-time tariff refunds, which will not repeat.

O'Reilly's own guidance leaves room for a slower second half. The 4% to 6% full-year comparable sales range is below the 7.0% first-half pace. Aggressive store expansion also brings execution risk and startup costs. On the other side, O'Reilly's steady operating margin, which held at 20.2% of sales in the second quarter, and its heavy Buybacks provide support.

The Next Test Is O'Reilly's Own Report

The next direct catalyst is O'Reilly's third-quarter report. The company has historically reported in late October, though it has not yet announced a date. Investors will look for comparable store sales within the raised 4% to 6% range, any update to EPS guidance of $3.20 to $3.30, progress toward 225 to 235 new stores, and commentary on tariffs and professional demand.

Advance Auto Parts' next quarterly update will offer another read on the industry.