CarMax Earnings Fall Short of Expectations
CarMax reported mixed fiscal second-quarter results before the markets opened on Wednesday, and shares drooped.
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CarMax Inc. (NYSE: KMX) reported its fiscal second-quarter results before the markets opened on Wednesday. Although earnings were in line with Wall Street expectations, revenues fell just a little short and investors sent the stock lower as a result.
The company said that it had $0.88 in earnings per share (EPS) on $4.00 billion in revenue, versus consensus estimates from Thomson Reuters of $0.88 in EPS on revenue of $4.09 billion. In the same period of last year, CarMax posted EPS of $0.82 and $3.88 billion in revenue.
Wholesale vehicle unit sales declined 1.3% from last year. Other sales and revenues declined 4.8% compared with the second quarter of fiscal 2016, primarily reflecting a decrease in new vehicle sales due to the disposal of two of our four new car franchises during fiscal 2016.
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Extended protection plan (EPP) revenues increased 17.1%, reflecting the growth in used unit sales and pricing changes. In addition, last year’s EPP revenues were reduced by an increase in estimated cancellation reserves. Net third-party finance fees improved by 43.3%, primarily due to the reduced proportion of our sales attributable to Tier 3 finance providers.
Compared with last year’s second quarter, CarMax Auto Finance income declined 2.4% to $96.0 million. The decline was due to an increase in the provision for loan losses and a lower total interest margin percentage.
On the books, CarMax’s cash and cash equivalents totaled $316.0 million at the end of the quarter, up from $100.5 million in the same period from last year.
Shares of CarMax were trading down less than 3% at $54.12 on Wednesday. The stock has a consensus analyst price target of $61.56 and a 52-week trading range of $41.25 to $60.81.
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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.
