Snapshot
O Reilly Automotive Inc reported $4.41B of revenue in Q4 2025, up 7.8% year over year, with diluted EPS of $0.71 and an operating margin of 18.8%.
- Revenue
- $4.41B
- YoY growth
- +7.8%
- Diluted EPS
- $0.71
- Operating margin
- 18.8%
What management said
- •During today's conference call, we will discuss our fourth quarter and full year 2025 results and our outlook for 2026.
- •We finished the year with a comparable store sales increase of 5.6% in the fourth quarter, which brought our full year comp for 2025 to 4.7%.
- •The 4.7% was at the high end of our revised guidance range of 4%-5% and above the expectations we set in our initial guidance coming into 2025.
- •Our strong comparable store sales performance, coupled with the continued successful execution of our new store expansion, drove a total sales increase of 6.4% to $17.8 billion.
- •To provide some perspective, our 2025 sales reflect an increase of over 50% in total sales volume over the last five years, representing growth of over $6 billion since 2020.
- •For the full year, we generated operating profit of $3.5 billion, a 6.4% increase over 2024.
- •On a percentage of sales basis, our 2025 operating profit of 19.5% was flat to the prior year and right at the midpoint of the guidance range we maintained throughout 2025.
- •We believe our continued sales growth trends reflect share gains won by consistently executing our proven business model while also delivering incremental improvements to further differentiate our service from the competition.
- •We will continue to prioritize these initiatives to lean into our business to sustain our growth momentum.
- •During the fourth quarter, we generated diluted earnings per share of $0.71, which represents an increase of 13% over the prior year.
- •For the full year, we generated EPS of $2.97, which was an increase of 10% over 2024.
- •As we noted in yesterday's press release, our 2025 results represent our 33rd consecutive year of annual comparable store sales increases and record levels of revenue, operating income, and EPS.
What went well
- •O'Reilly delivered a comparable store sales increase of 5.6% in the fourth quarter, bringing full-year 2025 comps to 4.7% at the high end of revised guidance, and total sales rose 6.4% to $17.8 billion. Professional (DIFM) comps grew over 10% for the second consecutive quarter, while DIY posted a positive low-single-digit comp. Q4 gross margin of 51.8% rose 49 basis points year-over-year and beat expectations, with full-year gross margin up 39 basis points to 51.6%. Fourth-quarter diluted EPS grew 13% to $0.71 and full-year EPS grew 10% to $2.97, marking the 33rd consecutive year of comparable store sales increases and record revenue, operating income, and EPS. The company opened a new distribution center in Stafford, Virginia, opening the Mid-Atlantic I-95 corridor, repurchased 23 million shares for $2.1 billion in 2025, and noted the pricing environment remained rational amid tariff-induced cost pressures.
What went wrong
- •O'Reilly faced substantial cost pressures in 2025, primarily rising team member healthcare and self-insurance program costs that dampened an otherwise strong finish. Per-store SG&A grew 3.3% in Q4, above expectations, so the SG&A leverage benefit came in below plan. Full-year operating profit margin of 19.5% was flat to the prior year. DIY transaction counts remained under modest pressure, finishing Q4 with slightly negative traffic comps, and average ticket growth was partially offset by a headwind from product mix. Free cash flow declined to $1.6 billion from $2.0 billion in 2024, driven by accelerated timing of renewable energy tax credit payments and higher CapEx.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Comparable store sales | FY2026 | — | 3%-5% | — |
| Total revenue | FY2026 | — | $18.7B-$19.0B | — |
| Gross margin | FY2026 | — | 51.5%-52.0% (midpoint +16 bps) | — |
| Diluted EPS | FY2026 | — | $3.10-$3.20 (+6.1% at midpoint) | — |
| Effective tax rate | FY2026 | 21.7% (FY2025) | 22.6% | approximately +0.9 pts (a ~$0.04 EPS headwind) |
| Free cash flow | FY2026 | $1.6B (FY2025) | $1.8B-$2.1B | increase |
| Per-store inventory growth | FY2026 | 9% (FY2025) | approximately 5% | — |
| AP to inventory ratio | FY2026 | 124% (year-end 2025) | approximately 122% | moderation |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Comparable store sales | up 5.6% (Q4); 4.7% full year | Professional business over 10% comp plus positive DIY; share gains from consistent execution |
| Total sales | up 6.4% to $17.8B | Strong comps plus new store expansion |
| Gross margin | up 49 bps to 51.8% (Q4) | Acquisition cost improvements, distribution efficiencies, and managed pricing, despite professional-mix headwind |
| Diluted EPS | up 13% to $0.71 (Q4); up 10% to $2.97 full year | Strong comps and gross margin, partly offset by SG&A cost pressures |
| Operating profit | up 6.4% to $3.5B (19.5% of sales, flat) | Sales growth offset by elevated self-insurance and healthcare costs |
| Same-SKU inflation | approximately 6% (Q4) | Tariff-induced product cost pressures with a rational pricing environment |
| Free cash flow | down to $1.6B from $2.0B | Accelerated renewable energy tax credit payment timing and higher CapEx |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Self-insurance / healthcare cost pressure | Flagged earlier in 2025 | Persisted longer than expected (increases on top of increases); more heightened in front half of 2026 | pressured |
| Professional (DIFM) business | Strong throughout 2025 | Over 10% comp for second consecutive quarter; preferred partner positioning | improving |
| DIY consumer demand | Pressured transaction counts in Q3 into early Q4 | Stabilized with modest month-to-month improvement, but still slightly negative traffic comps | stabilizing |
| Distribution network expansion | Fort Worth DC in development (operational Q1 2028) | Stafford, Virginia DC opened in Q4, opening Mid-Atlantic/Northeast; CapEx provision for next slate of projects | expanding |
| Tariff and pricing environment | Significant cost ramp and price changes in Q3 | Leveled out in Q4 with consistent month-to-month inflation benefit; 2026 guide assumes stable environment with no tariff-change projections | stable |
| Mexico business model evolution | Distribution-led model | Transitioning away from lower-margin jobber sales toward independent jobbers, creating a ~4-5 bps gross margin tailwind and modest SG&A pressure | evolving |
Q&A summary
How long could elevated expenses like healthcare run above historical levels, and does moderating 2H SG&A imply a normalized 2027 exit rate? (Scot Ciccarelli, Truist)
Management was not comfortable projecting a 2027 exit rate; self-insurance pressure has persisted as increases on top of increases, so a cautious posture is built into 2026 with more pressure expected in the first half against tougher comparisons.
How aggressively will you build out the Northeast/East Coast from the new Virginia DC? (Steven Forbes, Guggenheim)
The Stafford DC opened at about a third of capacity with over 150,000 SKUs and will be filled via greenfield and acquisitions (e.g., the seven-store Salvo Baltimore deal), but the 2026 new-store cohort will remain evenly spread across new and existing markets.
Why is initial 2026 comp guidance (3%-5%) 100 bps higher than 2025's initial guide, and could tariff rollback cause deflation? (Michael Lasser, UBS)
The difference is a different pricing assumption from calendaring the 2025 inflation benefit; the industry has historically been disciplined holding prices once passed through, especially on the professional side, so any cost relief tends to be temporary.
What is the risk SG&A per-store growth runs hotter than the 3%-4% guide again? (Michael Lasser, UBS)
Recent pressure has been more discrete from harder-to-control items (self-insurance, healthcare); prior years' elevated SG&A reflected deliberate investments like hub stores and distribution that drove sales momentum, not industry-wide table stakes.
How is DIY deferral trending, and how do tax refunds affect the business? (Greg Melich, Evercore ISI)
Larger-ticket job pressure was similar to Q3 but showed good December signs with winter weather; the consumer remains cautious, and tax season impact is yet to be seen across income levels (low-to-middle-income DIY, middle-to-higher-income DIFM).
How are tariff cost changes reflected and what is the gross margin cadence outlook? (Steven Zaccone, Citi)
As a LIFO reporter, cost reductions show up quickly in gross margin; first-quarter same-SKU inflation should be similar to Q4 against muted 2025 comparisons, with the same-SKU benefit larger in the first half than the second half of 2026.