ORLY

O'Reilly Automotive, Inc.

639.06
USD
1.73%
639.06
USD
1.73%
554.38 748.68
52 weeks
52 weeks

Mkt Cap 44.06B

Shares Out 68.95M

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2 Surprising Nasdaq Stocks Taking Hits on a Big Rally Day

Investors finally got in a bullish mood on Wall Street on Thursday, taking some solace from some high-profile earnings reports. As of 3 p.m. ET, the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up more than 3%, bouncing back from its recent declines. However, the good mood didn't lift every stock in the market. In particular, a couple of stocks released results that didn't live up to expectations, sending their shares lower. Below, we'll look more closely at why O'Reilly Automotive (NASDAQ: ORLY) and Align Technology (NASDAQ: ALGN) were both down sharply on such a strong day for the overall stock market. O'Reilly breaks down Shares of O'Reilly Automotive were down more than 10% on Thursday afternoon. The auto parts specialist reported first-quarter financial results that disappointed those who've looked favorably on what has been a healthy niche in the economy throughout the pandemic. O'Reilly's growth slowed from its breakneck pace from last year. Revenue for the quarter was up 7% to $3.30 billion, with comparable store sales growth slowing to 4.8%. That was a solid gain, but it was far slower than the 24.8% gain in comps that O'Reilly enjoyed this time last year. The company blamed inclement weather for part of its sluggish start to 2022, arguing that winter conditions early in the season and a slow start to spring weighed on consumer demand. Higher costs also hurt O'Reilly's bottom line. Net income was down 4% to $482 million, and that produced earnings of $7.17 per share. That wasn't quite good enough to satisfy shareholders. O'Reilly is betting that by appealing to professionals with a special pricing initiative, it will be able to boost its market share and take better advantage of its entire business opportunity across the industry. That might be true, but if the company can't overcome inflationary cost pressures in the process, then investors might not be willing to put up with the corresponding hit to margins and profitability. Align takes a punch in the teeth Meanwhile, shares of Align Technology dropped more than 15%. The orthodontic device-maker's quarterly results also raised questions about its longer-term growth prospects. Align wasn't able to keep up the pace of its past gains on key business and financial metrics. Quarterly sales were up just 9% to $973 million, and Invisalign case volumes rose by just 3,000 to 598,800. Although teenage patient unit volume rose more sharply, that suggested that the company's core adult audience saw pullbacks. Growth in its clear aligner, imaging systems, and CAD/CAM services units also continued to rise but at rates that fell short of what many investors wanted to see. Align blamed several factors. Globally, the COVID-19 pandemic continued to weigh on results, especially with China's zero-COVID policy. Moreover, inflation weakened consumer sentiment and made people less willing to commit to treatment regimens. With Align getting half its business from outside the U.S., a strong dollar also hurt the company's financial results. CEO Joe Hogan remains confident that the long-term prospects for Align remain strong, with the orthodontic specialist claiming less than 10% market share. However, with the war in Ukraine and macroeconomic pressures hurting the overall consumer environment, it might take some time for Align to return to its intended target of 20% to 30% revenue growth per year. 10 stocks we like better than OReilly Automotive When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and OReilly Automotive wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of April 7, 2022 Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Align Technology. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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