Key financial results

  • The company reported comparable store sales growth of 7.2% for the third quarter.Our comparable store sales growth of 7.2% in the third quarter and 7.1% year-to-date demonstrate our team's ability to generate strong results
  • Diluted earnings per share increased by 14% compared to the prior year period.Our team's focus on profitable growth translated to strong top line performance into a 14% increase in diluted earnings per share.
  • Total sales for the third quarter increased by $416 million.For the third quarter, sales increased $416 million, driven by a 7.2% increase in comparable store sales
  • Gross margin was 52.4%, which included a $39 million benefit from tariff refunds.For the third quarter, our gross margin of 52.4% and was significantly above our expectations and up 54 basis points from last year.
  • The tariff refunds provided a 76 basis point rate benefit to the third quarter gross margin.The largest driver of this gross margin expansion, as we noted in our press release yesterday, was a $39 million benefit from tariff refunds

Business segment results

  • Professional: The professional business was the primary driver of comparable store sales growth, with a comp increase of slightly over 10%.Our professional business was the larger driver of our overall comparable store sales growth with a third quarter professional cost of slightly over 10%.
  • Professional: Professional comp growth was split evenly between an increase in average ticket and increased transaction counts.Our professional comp growth was split evenly between an increase in average ticket and increased transaction counts.
  • Retail: The retail business achieved a mid-single-digit comparable store sales increase.Our retail business also had a strong quarter with a mid-single-digit comparable store sales increase.
  • Retail: Retail DIY transaction counts experienced a low single-digit headwind, which was offset by increases in average ticket.While we did experience a low single-digit headwind in DIY transaction accounts, that we believe is evidence of some pressure on the overall consumer
  • Management did not give segment profit figures on the call.

Capital allocation

  • The company repurchased 12 million shares for $1 billion during the third quarter.during the third quarter, we repurchased 12 million shares at an average share price of $87.34 for a total investment of $1 billion.
  • Year-to-date share repurchases totaled 41 million shares for an investment of $3.7 billion.Our 2026 year-to-date share repurchases through the date of yesterday's press release totaled 41 million shares for a total investment of $3.7 billion.
  • The company issued $1.6 billion in senior notes during the third quarter to term out commercial paper borrowings.We successfully issued $1.6 billion in senior notes during the third quarter, marking our largest ever senior note offering
  • Year-to-date capital expenditures totaled $860 million.Capital expenditures year-to-date totaled $860 million, and we remain on track with the projects driving our full year CapEx guidance range of $1.3 billion to $1.4 billion.
  • The U.S. car park continues to grow and age, and vehicle miles driven have shown stable growth.we have seen stable growth in vehicle loss driven, and the car part within the U.S. continues to grow and age.
  • Same-SKU inflation was slightly over 4% in the third quarter, primarily driven by petroleum-based products.Our average ticket in the third quarter included a benefit from same SKU inflation of slightly over 4% in our combined DIY and professional businesses.
  • Management considers industry pricing to be rational.We consider pricing to be rational within the industry and could see some continued upside to our same SKU expectations.

Competitive landscape

  • The company is gaining market share on both the professional and retail sides of the business.we still expect resilient demand within the industry and have confidence that the consistent execution of our team will drive share gains on both sides of the business.
  • The company prioritizes service and availability to maintain its competitive position.We will always pursue market share with a disciplined mindset that ensures we appropriately prioritize industry-leading service and availability

Macroeconomic environment

  • Middle to upper-income consumers and DIFM customers are healthier than low-end DIY consumers.
  • Consumers continue to prioritize maintenance and repair spending despite economic pressures.we were pleased to see a continued prioritization of maintenance spend by our customers as well as strong demand in key hot weather categories.
  • The company is experiencing cost pressure from higher fuel prices within its SG&A structure.We are also experiencing the expected modest level of pressure from higher fuel prices within our SG&A structure

Growth opportunities and strategies

  • The company opened 63 new stores in the third quarter and 173 net new stores year-to-date.During the third quarter, we opened 63 new stores across North America, bringing our year-to-date new store openings to 173 net new stores.
  • The company announced a 2027 new store target of 265 to 275 net new stores.These opportunities have us excited to announce today the continued acceleration of our new store growth with a 2027 new store target of 265 to 275 net new stores.
  • Capital deployment is prioritized toward new store investments and distribution expansion.we will continue to prioritize our capital deployment toward new store investments and distribution expansion projects that facilitate and support our core growth engine.

Financial guidance and outlook

  • Full year comparable store sales guidance was raised to a range of 5.5% to 6.5%.We raised our full year guidance from a range of 4% to 6% to a range of 5.5% to 6.5%.
  • Full year diluted EPS guidance was updated to a range of $3.25 to $3.35.As noted in our press release, we have updated our EPS guidance to the range of $3.25 to $3.35.
  • Full year gross margin guidance was raised by 10 basis points to a range of 51.6% to 52.1%.we've raised our full year gross margin guidance by 10 basis points to a range of 51.6% and to 52.1%.
  • Full year SG&A per store growth is expected in a range between 4.5% and 5%.we would now expect our full year SG&A per store growth in a range between 4.5% and 5%
  • Full year free cash flow guidance was increased to a range of $1.9 billion to $2.2 billion.For the full year of 2026, we are increasing our expected free cash flow guidance to a range of $1.9 billion to $2.2 billion.
  • Total revenue for 2026 is expected to be between $19 billion and $19.3 billion.For 2026, we now expect our total revenues to be between $19 million and $19.3 billion.

Tariff refunds

  • The company recognized $39 million in tariff refunds from suppliers in the third quarter.The $39 million we recognized in the third quarter are tariff refunds our supplier partners received directly and passed through to us.
  • Management views the tariff refunds as a discrete, one-off item.

Inventory

  • Per store inventory was $912,000 at the end of the quarter, up 6.3% from the prior year.Our per store inventory finished the quarter at $912,000, which was up 6.3% from this time last year
  • The company expects to finish the year with average inventory per store growth of 5%.We continue to expect to finish the year with an average inventory per store growth of 5%

Q3 2026 results

MetricResultChange
Comparable store sales7.2%increase
Diluted EPS14%increase
Gross margin52.4%up 54 basis points
New store openings (Q3)63Not stated
Free cash flow (9 months)$1.7 billionversus $1.2 billion

How management sounded

Balanced (+35 on our -100 to +100 scale). Management expressed strong confidence in their execution and market share gains, though they remained cautious about consumer pressure and the moderation of inflationary benefits. Management sounded more upbeat than on 20% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.

Read the analyst Q&A summary and guidance and outlook for this call.

What to watch before the next call

  • Sustainability of inflationary benefits, particularly in petroleum-based categories.
  • Impact of potential winter weather patterns on demand.
  • Management of SG&A costs relative to sales volume.

Earlier calls

  • Q2 2026 (Jul 30, 2026), tone Balanced: O'Reilly reported a 6% increase in comparable store sales and raised its full-year guidance to 4% to 6%. The company delivered 10% diluted EPS growth, repurchased $1.5 billion in shares during the quarter, and maintained its full-year operating profit guidance of 19.3% to 19.8%.