Shares of O'Reilly Automotive Inc. ORLY gained 1.4% to reach $222.49 on Jun 1, after the company announced an increase of $500 million in its share repurchase authorization. This takes the total authorization under the share buyback program to $5.5 billion.
The $500 million authorization came into effect from May 29, 2015 and is valid for a period of three years. O’Reilly will repurchase the shares from the open market. However, the timing and amount of the repurchases will depend on various factors including market conditions and share price.
The increase in share repurchase authorization reflects O’Reilly’s strong liquidity position. The company had cash and cash equivalents of $473.6 million as of Mar 31, 2015. In the first three months of 2015, net cash flow from operations improved to $406 million from $345.5 million in the prior-year period.
O'Reilly had approved another $500 million increase in its share repurchase program in Feb 2015. The company pursues an aggressive share repurchase policy, which continues to boost earnings per share.
During the first quarter of 2015, O’Reilly repurchased 0.6 million shares of its common stock for $135 million, reflecting an average price of $207.50 per share. Subsequent to the end of the first quarter and through Apr 22, 2015, the company bought back an additional 0.3 million shares for $75 million, implying an average price of $216.85 per share. As of Apr 22, 2015, the company had approximately $570 million worth of shares remaining under its share repurchase authorization.
O'Reilly currently carries a Zacks Rank #2 (Buy). Other well-ranked automobile stocks include CarMax Inc. KMX, PACCAR Inc. PCAR and U.S. Auto Parts Network, Inc. PRTS, all carrying a Zacks Rank #2.
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