O’Reilly Automotive (NASDAQ: ORLY) has several advantages compared to its competitors, such as its robust supply chain network which gives stores the ability to replenish auto parts quickly for its customers.
Drivers are investing more money into the maintenance of their vehicles instead of buying a newer model as interest rates, inflation and costs remain high.
The company updated its 2025 comparable store sales to a range of 3% to 4.5%, following its second quarter earnings “which reflects our updated expectations based on the sales trends we are currently seeing in our business,” said O’Reilly CEO Brad Beckham.
O’Reilly reported a 6% increase in sales during the second quarter to $253 million while net income rose by 7% to $669 million.
Even though O’Reilly increased prices on some products due to the new tariffs, customers continue to spend money on auto parts since replacing batteries, struts or brakes are not a frequent occurrence and are a necessity to keep their cars working.
“The strong value proposition of maintaining and repairing an existing vehicle, coupled with the high quality of vehicles, creates a very compelling incentive for our customers to prioritize their auto part spend,” said Beckham during an analyst call.
The behavior of drivers has shifted and they have been holding onto their cars much longer. The average age of cars in the U.S. keeps rising annually and is now 12.8 years, according to a May 2025 S&P Global Mobility report.
Opening more stores, regional distribution centers
Unlike other retailers who have started to close locations, the company opened 105 new stores across 34 U.S. states, Puerto Rico and Mexico during the first half of 2025 and plans to open a total of 200 to 210 stores for the entire year.
Another asset that O’Reilly has is its large footprint in North America with brick and mortar stores in 48 states along with ones in Puerto Rico, Canada and Mexico for both auto repair shops and customers who prefer to make repairs themselves.
O’Reilly’s stock performance is holding up. The stock is up 12% over the past six months and 39% over the past year. The stock currently has 23 buy ratings from Wall Street analysts and only five hold, two overweight and one sell rating with a median price target of $110.50.
The company is “a best-in-class retailer” that should trade “at a premium given its consistently strong performance,” wrote TD Cowen analyst Max Rakhlenko.
One of O’Reilly’s strengths is that the company built up an efficient and very accessible supply chain network which is the “key differentiator in a very competitive industry,” he wrote.
The company now has 33 distribution centers in the U.S. after purchasing a facility in Haslet, Texas, President Brent Kirby told analysts in a July 24 earnings call. O’Reilly is also nearly done with constructing a 530,000-square-foot distribution center in Stafford, Virginia, he said.
The company’s regional facilities, which are larger, can each provide auto parts for 350 stores. The number of distribution centers means that repair shops and retail customers can receive parts for their vehicles without long delays. The result is that “some stores receive as many as 6 to 8 replenishments per day,” said Rakhlenko. The average delivery time was less than 20 minutes, Rakhlenko said he was told during his store visits.
O’Reilly is likely to benefit as drivers are keeping their used cars longer to avoid making payments for a new one.
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