Thoughts For June 28, 2012 1

O'Reilly Automotive (ORLY) has lowered their second-quarter comp guidance after the market close on Tuesday,  to 2.0% - 2.5% from 3.0% - 5.0% previously. The company now expects second-quarter earnings to be at the low end of the previously announced range of $1.13 - $1.17.  The lowered comp guidance reflects a slow start to April due to a pull forward in demand from the early Spring weather and below expectation comps in June following an improved sales pace in May. Competitor Autozone (AZO) presented at the Oppenheimer Consumer Conference in Boston that afternoon and said that they had seen some regional weaknesses in the first seven weeks of the quarter but otherwise refused to comment on their sales. Both stocks were hit on the ORLY guide down.


ORLY has now dropped through their 200-day moving average, while AZO has dropped to its 200-day. AAP, a third competitor has been well below its 200-day moving average since missing earnings back in May. Autozone's next earnings release isn't until September, thus their is more than enough time for the stock to join its competitors below the 200-day moving average. The stock has areas of support at $350, $340 and $330, implying downside of 2%, 5% and 8%, respectively. That would be drops of $5, $15 and $25 from the current quote. The stock last flirted with its 200-day back in August.