O'Reilly Automotive's Strong Q3 Results Masked Weaker Details, UBS Says

01:15 PM EDT, 10/29/2026 (MT Newswires) -- O'Reilly Automotive (ORLY) delivered a strong Q3 with 7.2% comparable-sales growth, continued market-share gains and higher guidance, but the financial results were "not quite as strong as the headline numbers initially suggest," UBS Securities said in a report emailed Thursday. A one-time $39 million tariff refund provided a meaningful boost to gross margin and earnings per share, assuming that refund was recognized through gross profit, UBS said. Excluding that benefit, gross margin would have been roughly 51.6%, operating margin about 20.7%, basically flat year over year, and EPS about $0.93, nearly in line with consensus, according to the report. The company continues to execute well on traffic, market share and its professional business, but future growth may increasingly come from volume rather than margin expansion, UBS said. It also flagged softer free-cash-flow trends and higher capital spending as areas that deserve "the most scrutiny." UBS has a buy rating on O'Reilly Automotive, with a price target of $120, adding that it remains one of the "highest quality operators in retail" and is well positioned for continued earnings growth. Price: 87.18, Change: -3.27, Percent Change: -3.61