It has been about a month since the last earnings report for O'Reilly Automotive (ORLY Quick QuoteORLY - Free Report) . Shares have added about 0.7% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is O'Reilly Automotive due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

O'Reilly's Q2 Earnings Beat on Stellar Comps Growth

O’Reilly reported second-quarter 2021 earnings per share of $8.33, surpassing the Zacks Consensus Estimate of $7.28. Remarkable comparable store sales growth drove this outperformance. Comps grew 9.9% year over year for the quarter against the Zacks Consensus Estimate of a decline of 0.9%. The bottom line also increased from $7.10 a share recorded in the prior-year quarter.

This U.S.-based specialty retailer of automotive parts registered quarterly revenues of $3,466 million, which topped the consensus mark of $3,151 million. The top line was also higher than the prior-year level of $3,092 million.

The company opened 50 new stores during the second quarter, bringing the total store count to 5,732 as of Jun 30, 2021, which beat the Zacks Consensus Estimate of 5,717.

Financials, Share Repurchase & Costs

For the June-end quarter, selling, general and administrative expenses flared up 14% year on year to $1.03 billion. Nonetheless, operating income edged up 8% to $691.1 million from $796 million reported in the prior-year period on higher sales. Net income amounted to $585 million, up 10% year over year.

During the reported quarter, O’Reilly repurchased 0.7 million shares for $400 million at an average price of $537.25 per share. As of Jul 28, the company had $1.80 billion remaining under the current share-repurchase authorization.

It had cash and cash equivalents of $631.6 million as of Jun 30, 2021. Its long-term debt stands at $3,825.2 million, lower than the year-ago level of $4,127.4 million.

During the reported quarter, O’Reilly generated $822.2 million in cash from operating activities compared with the year-ago period’s $1,100 million. Capital expenditure increased to $127.7 million from the year-earlier period’s $111.2 million. Free cash flow declined 30.8% to $681.8 million from the prior year’s $985.7 million.

2021 Guidance Raised

For 2021, O’Reilly now projects total revenues within $12.3-$12.6 billion, up from prior guided range of $11.8-$12.1 billion. Earnings per share are envisioned within $26.80-$27.00 versus the previous view of $24.75-$24.95. It now expects comparable store sales to rise 5-7% versus growth of 1-3% projected earlier. Also, the Zacks Rank #3 (Hold) firm now envisions free cash flow in the band of $1.5-$1.8 billion, higher than the previous forecast of $1.1-$1.4 billion.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in estimates revision.

VGM Scores

At this time, O'Reilly Automotive has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise O'Reilly Automotive has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.