OReilly Automotive reported solid QQ2 2025 results, underscoring durable demand for automotive aftermarket parts and strong cash generation. Revenue reached $4.525B, up 5.9% year over year and 9.4% quarter over quarter, while gross profit rose to $2.327B for a margin of 51.4%. Operating income was $914.5M (margin 20.2%), and net income totaled $668.6M (margin 14.8%), with EPS of $0.78, up about 10.2% YoY and 24.5% QoQ. These profitability metrics align with sustained operating leverage and a favorable product mix as scale increases. Free cash flow stood at $456.1M on CFO of $756.8M, supported by a capex outlay of $300.7M and ongoing capital allocation activity, including $617.2M of common stock repurchases and a cash balance of $198.6M.
However, the balance sheet displays material leverage and negative equity. Total assets totalled $15.82B against liabilities of $17.05B, yielding shareholders’ equity of approximately -$1.23B. Total debt stands at $8.31B with long-term debt around $7.88B, resulting in a debt-to-capitalization reading above 100% and an elevated risk profile should financing conditions tighten. Despite these balance-sheet headwinds, the company generates robust operating cash flow and maintains strong interest coverage (~16x), enabling continued buybacks and potential deleveraging over time. The valuation remains premium versus broader markets (P/E around 28.8x, P/S ~17x), reflecting the franchise strength in the automotive aftermarket but underscoring the need to balance leverage risk with cash generation going forward.