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Auto Parts Retailers Outperform, O’Reilly Reports Earnings (ORLY, AZO)

Posted on | October 30, 2008 Time: 9:04 pm |

While the auto industry propells itself into the abyss, the parts retailers like AutoZone (AZO) and O’Reilly Automotive (ORLY) are seeing their value proposition become more relevant in the marketplace. As credit remains tight and new car sales plummet, more and more people are putting off major purchases in favor of repair and/or band-aid projects for their cars.

I wrote about this trend earlier in the month, highlighting O’Reilly as my favorite in the group because there’s a lot of improvement they can bring to recent acquisition CSK Auto. While O’Reilly has been a top operator, registering comps growth of 2% - 3% in 2008 (both AZO and Advance Auto are flat to down), CSK has been running (1%) to (3%) this year despite being favorably positioned geographically in its markets. O’Reilly should be able to drive marginal improvement at the CSK stores, while the potential customer base is rising as new car sales fall.

Valuations are below market averages, and the industry could be one of the few that actually benefits from a recession. O’Reilly and AutoZone have both outperformed the S&P 500 by 10 percentage points since October 15th.

Ryan Barnes

More on this topic (What's this?)
Auto Parts Retailers Rallying (Dividends Value, 4/10/09)
Eddie Lampert Lost $30 Million an Hour (market folly, 10/30/08)
Auto Parts: An Industry for a Poor Economy (College Analysts, 9/11/08)
Read more on AutoZone, Retail, O'Reilly Automotive at Wikinvest
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