ORLY · Q1 2026 Earnings
BullishO’Reilly Automotive
Reported April 29, 2026
30-second summary
O'Reilly opened 2026 with an 8.1% comp — more than triple the low end of the FY 3–5% range — driving revenue +10.2% to $4.56B, with Pro total revenue up 14.6% and DIY up 6.7%. Management raised FY EPS by $0.05 to $3.15–$3.25 and lifted the operating margin band 10bps, but explicitly held the FY comp guide flat at 3.0–5.0% on stated consumer caution and a self-described reluctance to "overreact to first quarter results." The hidden tell: holding the comp band after an 8.1% Q1 implies management is baking in materially sub-3% comps somewhere in H2.
Headline numbers
EPS
Q1 FY2026
$0.72
Revenue
Q1 FY2026
$4.56B
+10.2% YoY
Gross margin
Q1 FY2026
51.5%
Free cash flow
Q1 FY2026
$0.79B
Operating margin
Q1 FY2026
18.5%
Key financials
Q1 FY2026| Metric | Q1 FY2026 | YoY | Q4 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $4.56B | +10.2% | $4.41B | +3.3% |
| EPS | $0.72 | — | $0.71 | +1.4% |
| Gross margin | 51.5% | — | 51.8% | -30bps |
| Operating margin | 18.5% | — | 18.8% | -30bps |
| Free cash flow | $0.79B | — | $0.36B | +116.9% |
Guidance
EPS guidance raised $0.05 to $3.15–$3.25 following Q1 beat; operating margin upside; comp store sales and margin guidance held despite strong Q1 performance due to stated consumer caution.
Guidance is issued for both next quarter and the full year. Both may appear below.
Changes to prior guidance
| Metric | Period | Prior guide | New guide | Δ | Result |
|---|---|---|---|---|---|
| Diluted earnings per share | FY 2026 | $3.10 to $3.20 | $3.15 to $3.25 | +$0.05 at both low and high end | Raised |
| Operating income as a percentage of sales | FY 2026 | 19.2% to 19.7% | 19.3% to 19.8% | +0.1 percentage points at both low and high end | Raised |
Reaffirmed unchanged this quarter: Comparable store sales (3.0% to 5.0%), Gross profit as a percentage of sales (51.5% to 52.0%), Net cash provided by operating activities ($3.1 billion to $3.5 billion), Capital expenditures ($1.3 billion to $1.4 billion), Free cash flow ($1.8 billion to $2.1 billion), Net new store openings (225 to 235), Effective income tax rate (22.6%)
Segment performance
Q1 FY2026| Segment | Q1 FY2026 | YoY |
|---|---|---|
| DIY (Do-It-Yourself) | $2.19B | +6.7% |
| Professional Service Provider | $2.29B | +14.6% |
Platform metrics
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Comparable Store Sales Growth | 8.1% |
| Total Store Count | 6,644 |
| Domestic Store Count | 6,495 |
| Sales per Weighted-Average Square Foot (Q1) | $85.94 |
| Sales per Weighted-Average Store (Q1) | $688,000 |
| Inventory Turnover | 1.6x |
| Average Inventory per Store | $874,000 |
Profitability
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Adjusted Debt to EBITDAR (LTM) | 2.03x |
Management tone
Tariff-driven consumer caution (Q2-25) → Pro-led acceleration, DIY cracks (Q3-25) → Pro moderation expected, DIY structurally pressured (Q4-25) → Pro+DIY both outperformed, share gains reframed as structural (Q1-26).
The DIY narrative completed a near-180. Two quarters ago management was building a structural overlay — "better engineered parts, extended service intervals" — that justified an indefinite negative-DIY-transaction outlook in the FY26 guide. This quarter, DIY transactions blew past plan and became an "equal driver" of the beat. The framing of the verbatim language: "While DIY was the smaller overall contributor to the total comparable store sales growth in the first quarter, it was an equal driver of the outperformance we delivered versus our expectations coming into the quarter." Management did not retract the structural overlay; they merely noted the print outperformed it. That hedging — acknowledging the upside without revising the model — is consistent with the FY comp guide staying frozen at 3–5%.
Share-gain confidence migrated from defensive framing to offensive framing across four quarters. In Q2-25 management talked about being "cautious" on the consumer. In Q3-25 they claimed share gains while admitting mid-quarter DIY pressure. In Q4-25 they explicitly walked back Pro expectations for FY26. This quarter the language pivots: "We have confidence in the health of our industry and even more in our ability to take market share in any market backdrop." The "in any market backdrop" qualifier is new — and signals management now believes their execution has decoupled from macro.
Supply chain framing shifted from headwind to managed advantage over the multi-quarter arc. Q2-25 flagged tariffs as a risk explicitly carved out of guidance. Q3-25 claimed "lion's share" of cost impacts behind them. Q4-25 reverted to neutrality with an explicit binary carve-out. Q1-26 reframes the entire posture via private label: "Our private label penetration has climbed to over 50% of total revenue… Having the ability to adjust orders and demand across a broader base of suppliers is an important tool." Supply-chain volatility is now positioned as a competitive advantage rather than a manageable risk.
The consumer-caution language softened in substance even as it persisted in form. Management still says "we remain cautious in our outlook for the consumer" — verbatim Q4 language. But this quarter they added a critical qualifier: "So far, our first quarter results and trends thus far in April have not indicated a pullback in consumer demand." Reading the two together: the caution language is now boilerplate, not a signal. The April commentary is the real read.
Tone breaks from typical ORLY. Per house norm, O'Reilly leans hard into conservative framing. This quarter management is leaning into share-gain confidence and execution while keeping the guardrails up — an unusually bullish posture from a name known for under-promise/over-deliver.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
Simeon Gutman · Morgan Stanley
Asked about market share acceleration versus industry, whether internal data corroborates external observations, and whether share gains are market-specific or broad-based. Follow-up on percentage of customers where O'Reilly is primary distributor.
Management confirmed directional agreement on solid share gains, noting strong execution across teams. Stated they focus more on internal execution than competitors. Acknowledged broad-based performance across markets and customer types (both new and existing). Declined to disclose exact primary distributor percentage but noted even in mature markets (Missouri, Oklahoma, Kansas, Arkansas, Texas, Iowa, Nebraska) they have only 10% share with significant runway.
Greg Mellick · Evercore ISI
Asked about like-for-like inflation at 600 basis points, expectations for deceleration to 2% as tariff increases wrap, potential impact of gasoline costs on SG&A. Follow-up on quantifying tax refund stimulus benefit versus weather impact and cadence forward.
Management maintained 3% same-store sales guidance unchanged, emphasizing reluctance to speculate on future price movements without clarity. Noted pricing stabilized, normal acquisition cost environment with some puts and takes. Acknowledged potential fuel price pass-through but noted industry has historically handled such pressures. On tax refunds and weather, declined to precisely quantify but confirmed both were helpers; tax refunds and weather likely contributed to pent-up demand catch-up rather than pull-forward; noted first quarter results should not be overinterpreted.
Christian Carlino · J.P. Morgan
Asked whether O'Reilly passes through product cost inflation and ocean freight but absorbs domestic fuel costs, and if there is a threshold at which domestic freight costs are passed through. Follow-up on quarter-to-date comps trajectory and shape of Q2+ comps given comparisons, weather, and fading stimulus.
Management confirmed framework that product acquisition costs (including inbound freight) are generally passed through after supplier mitigation, while operating fuel costs are absorbed within distribution and SG&A. Noted operating fuel costs are manageable within broader expense outlook and margin guidance. For sustained, broad-based cost pressures, industry has historically passed through; expects similar behavior going forward. On comps, noted Q1 started solidly and improved, with strong finish in Feb-March despite tough March comparison. April showed moderation consistent with seasonality but still running ahead of expectations; quarter remains early.
Mike Baker · DA Davidson
Asked to reconcile high SG&A growth (9% quarter) between incremental labor to support high comps versus prior period legal and health care cost pressures. Requested breakdown of guidance and cost evolution through year. Follow-up on whether tax refund spending represents pull-forward vs. catch-up demand and historical impact on subsequent quarters.
Management attributed SG&A growth primarily to pace of business and incremental labor to support transaction growth, plus incentive compensation tied to higher comps. Noted insurance and liability costs were in line with expectations and showed no trend change from prior year. Labor cost growth driven by wage rates rather than headcount reductions; employees per store down despite higher comps due to productivity improvements and staffing mix optimization. On tax refunds, management expressed confidence in catch-up interpretation based on category performance and lack of significant trade-down, though acknowledged pull-forward could be a minor factor.
Brett Jordan · Jefferies
Asked about private label penetration target (currently over 50%), variation by market maturity (Missouri vs. Northeast expansion), and sourcing flexibility. Follow-up on motor oil supply chain impact—is it primarily price inflation or actual supply shortage risk given Middle East sourcing pressures?
Management confirmed no stated penetration target; strategy is to let customer demand (wallet voting) drive mix while maintaining relevant national brands alongside proprietary brands. Noted private label portfolio provides sourcing flexibility across multiple suppliers for same SKU. Indicated adoption of proprietary brands is consistent across mature and new markets; no disparity observed. On motor oil, confirmed sourcing pressure from Far East, particularly synthetic oils, with pricing pressure from suppliers. Teams working through mitigation; confident in ability to manage. Duration of conflict and sustained oil price inflation will determine extent of impact.
Answers to last quarter's watch list
What to watch into next quarter
Whether April's "moderation" turns into Q2 comp deceleration toward the FY 3–5% band. Management flagged April softer than March in Q&A. If Q2 comp prints meaningfully below 5–6%, the FY band-hold logic was correct. If Q2 holds above 6%, management is sandbagging the FY guide and an upward revision becomes the Q2-print event.
DIY transaction-count cadence. Q1 transactions exceeded plan despite the FY26 guide assuming negative DIY traffic. Watch whether Q2 DIY transactions stay positive — that would force a structural revision of the FY26 demand model.
Whether the FY comp guide gets raised on the Q2 print. Holding 3–5% after an 8.1% Q1 is unsustainable narrative-wise unless H2 craters. A Q2 raise to ~4–6% would confirm Q1 sandbagging; a hold-at-3-to-5 again would signal management really does see deceleration.
Motor oil cost pressure — two distinct vectors. (1) Far East sourcing pressure on synthetic motor oils flagged in Q&A (pricing, not supply); (2) Iran conflict / global oil supply constraints flagged in prepared remarks (potential impact on motor oil categories and freight). Neither hit Q1; both are H2 watch items. Look for explicit gross margin commentary in Q2.
Operating margin landing inside the new 19.3–19.8% band. Q1 at 18.5% is below the band but seasonally explainable. Q2 typically runs above Q1 for ORLY. A Q2 print below ~20% would put the FY band at risk.
Inventory per store trajectory. $874K in Q1, up from $870K at YE25 (+0.5% sequentially, +8.5% YoY). Management is still targeting 5% per-store growth by YE26. A Q2 figure above $880K would signal working-capital absorption is materially trailing demand growth.
Sources
- O'Reilly Automotive Q1 2026 press release / 8-K Exhibit 99.1: https://www.sec.gov/Archives/edgar/data/898173/000089817326000024/orly-20260429xex99d1.htm
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