Should CarMax Get More Credit for Q3 Earnings?
CarMax released mixed fiscal third-quarter financial results before the markets opened on Friday, but its share price rose.
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When CarMax Inc. (NYSE: KMX) released its fiscal third-quarter financial results before the markets opened on Friday, the company said that it had $1.09 in earnings per share (EPS) and $4.3 billion in revenue. Consensus estimates had called for $1.00 in EPS and $4.32 billion in revenue, while $0.81 per share and $4.11 billion were posted in the same period of last year.
In the most recent quarter, used unit sales in comparable stores declined 1.2% while total used unit sales rose 2.3%. The comparable store sales performance primarily reflected lower store traffic, partially offset by improved conversion.
Total wholesale vehicle unit sales increased 10.0% year over year, largely driven by the growth in the store base and a higher appraisal buy rate.
CarMax Auto Finance income increased 6.7% to $109.7 million.
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The company did not offer any guidance in the report. However, the consensus estimates call for $1.05 in EPS and $4.49 billion in revenue for the fiscal fourth quarter.
Bill Nash, president and CEO, commented:
We are pleased to report solid growth in both pretax earnings and earnings per share, despite having soft comparable store used unit sales this quarter. This is a testament to the strength of our diversified business model. We are also excited to introduce our omni-channel experience in Atlanta, where consumers can now customize their car buying experience, whether they want to buy a car completely from home, in-store or, most importantly, through a seamlessly integrated combination of online and in-store experiences.
Shares of CarMax were last seen up 4% at $59.00, with a consensus analyst price target of $83.85 and a 52-week trading range of $55.24 to $81.67.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
