O'Reilly Raises Share Repurchase Authorization By $750M

O'Reilly Automotive Inc. (NASDAQ:ORLY) announced that it has increased its share repurchase authorization by $750 million. This takes the total authorization under the company’s share buyback program to $7 billion.

The increased authorization came into effect from May 27, 2016 and is valid for a period of three years. O’Reilly will repurchase the shares from the open market. However, the timing and amount of the repurchases will depend on various factors including market conditions and share price.

The hike in share repurchase authorization reflects O’Reilly’s strong liquidity position. The company had cash and cash equivalents of $716 million as of Mar 31, 2016, compared with $473.6 million as of Mar 31, 2015. In the first quarter of 2016, net cash flow from operations increased to $488.2 million from $406 million in the prior-year period.

O'Reilly had approved another $750 million increase in its share repurchase program in Feb 2016. Repurchase authorizations of $500 million each were approved in February as well as May of 2015. The company pursues an aggressive share repurchase policy, which continues to boost earnings per share.

During the first quarter of 2016, O’Reilly repurchased 1.2 million shares for $313 million. From Mar 31, 2016 through Apr 27, the company bought back an additional 0.3 million shares for $71 million. Since the inception of the share repurchase program in Jan 2011, O’Reilly has repurchased a total of 52.7 million shares for $5.74 billion. As of Apr 27, 2016, the company had $509 million remaining under its share repurchase authorization.

O'Reilly currently carries a Zacks Rank #3 (Hold). Some better-ranked automobile stocks include Lear Corp. (NYSE:LEA) , Superior Industries International, Inc. (NYSE:SUP) and Oshkosh Corporation (NYSE:OSK) . All the three stocks sport a Zacks Rank #1 (Strong Buy).