O'Reilly (ORLY) Q1 2026: 8.1% Comps End 3-Year Margin Slide
O'Reilly Automotive posted its first first-quarter operating margin expansion in four years, with operating margin rising 53 basis points to 18.45% on an 8.1% comparable store sales gain — reversing a slide that had run from 20.31% in Q1 2022 down to 17.92% in Q1 2025. Sales grew 10.24% to $4.561 billion from $4.137 billion, the fastest first-quarter growth since 2023, and operating income rose 13.51% to $841.6 million from $741.5 million. What makes the quarter genuinely different from the last three is that the company finally grew faster than its fixed cost base: payroll, rent and depreciation together rose 7.54% against a 10.24% sales increase. The offsetting development is on the balance sheet, where a $922.9 million buyback — 152.8% of the quarter's net income — pushed the shareholders' deficit back out to $1.067 billion after five consecutive quarters of narrowing.
Balance Sheet: Assets Barely Move, Equity Deficit Reopens
Total assets grew just 2.41% to $16.937 billion from $16.538 billion at December 31, 2025 — a deliberately asset-light quarter relative to the sales growth.
| Item | Dec 31, 2025 ($M) | Mar 31, 2026 ($M) | Change % |
|---|---|---|---|
| Cash and cash equivalents | 193.8 | 252.6 | +30.4% |
| Accounts receivable, net | 389.8 | 431.2 | +10.6% |
| Inventory | 5,731.4 | 5,810.1 | +1.4% |
| Net property and equipment | 6,257.4 | 6,375.0 | +1.9% |
| Operating lease right-of-use assets | 2,391.2 | 2,450.4 | +2.5% |
| Goodwill | 948.2 | 953.0 | +0.5% |
| Total assets | 16,538.3 | 16,937.2 | +2.4% |
The single most informative line is inventory, up only 1.37% to $5.810 billion while sales grew 10.24%. Receivables rose 10.62%, tracking sales almost exactly, which argues the growth is being collected rather than parked in credit terms. Net property and equipment grew 1.88% even as 59 net new stores opened during the quarter, versus 38 a year earlier — capital expenditures actually fell 14.81% to $244.4 million, which the filing attributes to the timing of store and distribution projects rather than a change in ambition. Under U.S. GAAP these assets sit at historical cost with no revaluation permitted, so a store network built over decades is carried well below any replacement or market value.
