01—Abstract
Summary
Summary of the 8-K filed April 29, 2026. Cited figures are marked; the original filing is the authoritative source.
O'Reilly Automotive (ORLY) reported a strong first quarter 2026, with comparable store sales up 8.1% on top of a 3.6% gain a year earlier, and net sales up 10% to $4.56 billiona.
Management said professional sales grew double digits and DIY grew mid-single digits. Operating income rose 14% to $842 millionb, with operating margin expanding to 18.5% from 17.9%, driven by gross margin gains (51.5% vs. 51.3%) and SG&A leverage (33.0% of sales vs. 33.4%). Diluted EPS increased 16% to $0.72 on 843 million diluted shares, versus $0.62 a year earlier, reflecting both earnings growth and a roughly 2.5% lower share count.
Cash generation and capital returns were prominent. Operating cash flow reached $1.03 billionc in the quarter (vs. $755 million), and free cash flow was $785 million (vs. $455 million). The company repurchased 10.0 million shares for $923 million in Q1 and an additional 3.6 million shares for $338 million after quarter-end, leaving about $1.14 billion under its current authorization.
Total debt rose to $6.2 billiond long-term, and shareholders' deficit narrowed to $(1.07) billion, a consequence of the company's continued buybacks. Adjusted debt to EBITDAR was stable at 2.03x. Management reaffirmed a constructive outlook while updating full-year 2026 guidance, which calls for comparable store sales growth of 3.0% to 5.0%, total revenue of $18.7 billion to $19.0 billion, diluted EPS of $3.15 to $3.25, and free cash flow of $1.8 billion to $2.1 billion.
The company expects 225 to 235 net new stores. The release describes stable industry demand, though it carries standard forward-looking risk language, including tariffs, consumer debt levels, and supply chain exposure.
02—Key points
Key Highlights
- Comparable store sales rose 8.1% in Q1 2026, well above the 3.6% gain in the prior-year period, with professional up double digits and DIY up mid-single digits.
- Sales increased 10% to $4.56 billion; operating income rose 14% to $842 million, with operating margin expanding 60 bps to 18.5%.
- Diluted EPS grew 16% to $0.72, aided by a roughly 2.5% reduction in diluted share count year over year.
- Q1 free cash flow was $785 million, up from $455 million, on operating cash flow of $1.03 billion.
- Aggressive buybacks continued: $923 million repurchased in Q1 plus $338 million after quarter-end; about $1.14 billion remains under authorization.
- FY2026 guidance updated: comparable store sales +3.0% to +5.0%, diluted EPS $3.15 to $3.25, free cash flow $1.8 to $2.1 billion.
- Store footprint reached 6,644 locations at quarter-end, with 225 to 235 net new openings planned for 2026; adjusted debt to EBITDAR held at 2.03x.
03—Questions
Frequently Asked Questions
What drove O'Reilly's strong Q1 2026 results?
Comparable store sales growth of 8.1% drove the results, with double-digit professional growth and mid-single-digit DIY growth. Gross margin expanded slightly to 51.5%, and SG&A grew more slowly than sales, which lifted operating margin to 18.5%.
Is the company still returning significant capital to shareholders?
Yes. It repurchased $923 million of stock in Q1 and another $338 million after quarter-end, with about $1.14 billion left under its current authorization. The shareholders' deficit narrowed to $(1.07) billion but remains negative due to cumulative buybacks.
What is the full-year 2026 outlook?
Management guides to comparable store sales growth of 3.0% to 5.0%, total revenue of $18.7 to $19.0 billion, operating margin of 19.3% to 19.8%, and diluted EPS of $3.15 to $3.25. Free cash flow is expected between $1.8 and $2.1 billion, and the company plans 225 to 235 net new stores.
How healthy is the balance sheet and leverage profile?
Long-term debt increased to $6.2 billion from $5.65 billion a year earlier, partly due to a new $847 million debt issuance offset by a $500 million repayment. Adjusted debt to EBITDAR was 2.03x, unchanged year over year, and interest expense rose modestly to $62.7 million for the quarter.
What risks should investors monitor?
The press release flags tariffs and trade policy changes, consumer debt levels, product demand, supply chain disruption, competition, and weather as key risks. Inventory rose to $5.8 billion (about $874K per store), so inventory productivity and accounts payable funding will be worth tracking alongside comparable sales growth, which guidance implies will moderate for the remainder of the year.
04—Continue