CarMax Earnings Fail to Impress

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CarMax Inc. (NYSE: KMX) reported its fiscal first-quarter financial results before the markets opened on Tuesday. The company said that it had $0.90 in earnings per share (EPS) on $4.13 billion in revenue. Consensus estimates from Thomson Reuters were $0.92 in EPS on revenue of $4.19 billion. In the same period of last year, it posted EPS of $0.86 and $4.01 billion in revenue.

The comparable store used unit sales rose 0.2% compared to the prior year’s first quarter. The comparable store sales performance reflected the combination of an improvement in conversion that more than offset a decrease in store traffic.

Wholesale vehicle unit sales grew 1.8% versus the first quarter of fiscal 2016, primarily driven by the growth in our store base.

Total gross profit increased 5.3% versus last year’s first quarter to $572.6 million. Used vehicle gross profit rose 4.1%, driven by the 4.0% increase in total used unit sales.

Compared with last year’s first quarter, CarMax Auto Finance income declined 7.7% to $100.8 million. The decline was due to an increase in the provision for loan losses and a lower total interest margin percentage, partially offset by the effects of an increase in average managed receivables.

On the books, CarMax’s cash and cash equivalents totaled $52.6 million at the end of the quarter, compared to $351.7 million at the end of the same period of last year.

Shares of CarMax closed Monday up 1% at $50.63, with a consensus analyst price target of $60.81 and a 52-week trading range of $41.25 to $69.15. Following the release of the earnings report, the stock was down 4.5% at $48.35 in Tuesday’s premarket.

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