CarMax Falls Despite Top-Line Beat

CarMax Inc. (NYSE: KMX) reported its fiscal fourth-quarter financial results before the markets opened on Thursday. The company posted $0.71 in earnings per share (EPS) on $3.71 in revenue, which compares to consensus estimates from Thomson Reuters of $0.71 in EPS on revenue of $3.68 billion. In the same period of last year, it posted EPS of $0.67 and $3.51 billion in revenue.

Net sales and operating revenues increased 5.5%, while used unit sales in comparable stores increased 0.7%. Total used unit sales rose 4.0%.

CarMax Auto Finance (CAF) income increased 2.2% to $92.3 million in the fourth quarter.

The company plans to open 15 stores in fiscal 2017.

During the fourth quarter, the company repurchased 3.0 million shares of common stock for $155.8 million. For the fiscal year, CarMax repurchased 16.3 million shares for a total of $971.2 million. At the end of February, the company had $1.40 billion remaining available for repurchase under the program.

Tom Folliard, CEO of CarMax, commented:

While we faced a somewhat more challenging sales environment in the second half of the year, we delivered solid revenue and EPS growth in both the fourth quarter and the fiscal year, we opened a record number of stores and we made progress toward optimizing our capital structure by buying back 16.3 million shares in fiscal 2016.

On the books, cash and cash equivalents totaled $37.4 million, compared to $27.6 million in the same period of last year.

Shares of CarMax traded down 6% at $50.09 on Thursday, with a consensus analyst price target of $62.35 and a 52-week trading range of $41.25 to $74.55.