What’s Driving CarMax’s Strong Q2?
CarMax shares popped after it reported better than expected quarterly results before the markets opened on Tuesday.
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CarMax Inc. (NYSE: KMX | KMX Price Prediction) reported its most recent quarterly results before the markets opened on Tuesday. The auto-retailer posted $1.40 in earnings per share (EPS) and $5.20 billion in revenue for the second quarter, topping the consensus estimates of $1.33 in EPS and $5.05 billion in revenue. In the same period of last year, CarMax said it had EPS of $1.24 on $4.77 billion in revenue.
During the most recent quarter, total used vehicle unit sales increased 6.2%, including a 3.2% increase in comparable store used unit sales compared with the prior year’s second quarter. The comparable store sales performance reflected strong conversion and solid growth in web traffic.
Total wholesale vehicle unit sales increased by 4.7%, largely driven by an increase in the appraisal buy rate, partially offset by lower appraisal traffic.
Other sales and revenues increased 8.5% compared with the second quarter of fiscal 2019. Also, CarMax Auto Finance (CAF) income increased 4.1% to $114.1 million, reflecting a 7.8% increase in average managed receivables, slightly offset by a higher loan loss provision.
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Bill Nash, president and CEO, commented:
CarMax posted solid second quarter results, and our double-digit increase in earnings per share reflected growth across our used, wholesale and CAF operations, along with ongoing share repurchases.
In addition, we made significant progress on the roll-out of our omni-channel experience, and we remain confident that this is the future of car buying. This experience, which allows customers to move seamlessly between online channels and physical locations, is now offered to approximately one-third of our customer base. And, we remain on track to reach the majority of our customers by the end of this fiscal year.
Shares of CarMax traded up almost 3% early Tuesday at $89.39, in a 52-week range of $55.24 to $92.01. The consensus price target is $97.75.
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Chris Lange is a financial and geopolitical writer with more than a decade of experience covering a myriad of topics. He has published thousands of articles for 24/7 Wall St., with past coverage focused heavily on stocks, IPOs, healthcare, defense, global affairs, and technology.
His work has been quoted, or referenced by a number of outlets including Business Insider, USA Today, Yahoo Finance, MSN, The Motley Fool, and many other publications. A graduate of Southwestern University, he studied business with a focus on investments and has previous experience in banking and startups.
When not reading or writing the news, he is following his passion for Lacrosse, playing chess, or building solar projects with his dad.
