CarMax Rises on Mixed Earnings

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When CarMax Inc. (NYSE: KMX) released its fiscal third-quarter earnings report before the markets opened on Tuesday, the company posted $0.72 in earnings per share (EPS) and $3.7 billion in revenue. Consensus estimates from Thomson Reuters called for $0.70 in EPS and revenue of $3.75 billion. In the same period of last year, CarMax reported EPS of $0.63 and $3.54 billion in revenue.

CarMax also posted used unit sales in comparable stores as 5.4%, with total used unit sales rising about 9.1%. The comparable store sales performance resulted from increases in both conversion and store traffic.

At the same time, wholesale unit sales declined 2.2% as contributions from the growth in its store base and an improved appraisal buy rate were more than offset by a reduction in appraisal traffic.

CarMax Auto Finance (CAF) income declined 3.2% to $89.4 million. The decline was due primarily to an $11.0 million increase in the provision for loan losses, which resulted from both higher loss experience in recent quarters and the growth in managed receivables.

During the third quarter of fiscal 2017, CarMax repurchased 3.8 million shares of common stock for $198.7 million, according to its share repurchase program. At the end of the quarter, the company had $1.69 billion remaining available for repurchase under the program.

So far in 2016, CarMax has outperformed the broad markets, with the stock up about 18%.

Shares of CarMax were trading up about 3.9% at $64.77 on Tuesday, with a consensus analyst price target of $62.87 and a 52-week trading range of $41.25 to $64.88.