O’Reilly Automotive: Margin Strength and Stable Comps Support Buy Rating Despite Softer Quarter

UBS analyst Michael Lasser has maintained their bullish stance on ORLY stock, giving a Buy rating today.

Michael Lasser has given his Buy rating due to a combination of factors that, in his view, leave O’Reilly Automotive’s investment story intact despite a slightly softer quarter. He acknowledges that fourth-quarter earnings and comparable sales came in modestly below market expectations and that operating expenses, particularly SG&A per store, ran higher than anticipated. However, he emphasizes that management’s same-store sales outlook of 3–5% aligns with what investors were expecting, which counters fears of a sharp slowdown as pricing tailwinds diminish. He also notes that the company appears to be gaining market share, with its comparable sales performance likely to remain among the strongest in the sector.
At the same time, Lasser highlights that gross margin expanded meaningfully and exceeded consensus, suggesting healthy underlying profitability and room for margin improvement this year. He points to management’s guidance for slower growth in SG&A per store as a sign that cost pressures should ease, while still allowing the company to invest enough to protect its customer value proposition and long-term growth prospects. Although a short-term share price pullback is possible following the results, he views the setup for the next few quarters favorably, citing solid early-quarter trends, anticipated gross margin gains, and moderating expense growth. Taken together, these elements support his constructive view on the risk/reward profile and underpin his Buy recommendation on ORLY shares.

Based on the recent corporate insider activity of 54 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ORLY in relation to earlier this year.