Cars and Drivers

What to Expect From CarMax Earnings

CarMax Inc. (NYSE: KMX) is scheduled to report is fiscal second-quarter financial results before the markets on Tuesday. The consensus estimates from Thomson Reuters call for $0.76 in earnings per share (EPS) on $3.98 billion in revenue. In the same period of the previous year, it posted EPS of $0.64 and $3.60 billion in revenue.

This is the top stock to buy now in the consumer discretionary sector. CarMax has benefited from the huge need for consumers to replace their cars and trucks after years of waiting. The company excels in the pre-owned area, and business looks decent for the rest of 2015. Though CarMax does not offer the same manufacturer used car incentives, it does have its own coverage to encourage people to buy used. The company was recently named one of Fortune magazine’s 100 best companies to work for. CarMax continues to grow and has plans to open between 10 and 15 stores each year for the next several years.

With a slowly but surely growing economy, and some degree of job and wage growth, many analysts on Wall Street feel that the company has solid upside potential.

A few analysts weighed in on CarMax prior to its earnings release:

  • RBC Capital has a Sector Perform rating but lowered its price target to $69 from $76.
  • Wedbush reiterated a Hold rating with a $70 price target.
  • Sterne Agee reiterated a Buy rating and lowered its price target to $83 from $87.

So far in 2015, CarMax shares have underperformed the market after having a large sell-off in the late summer months. Its shares were down 9.5% year to date. However, shares are up 12.6% over the past 52 weeks.

Shares of CarMax were up 3.2% to $62.18 Friday afternoon. The stock has a consensus analyst price target of $75.27 and a 52-week trading range of $43.27 to $75.40.

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