) hit a new 52-week high of $42.45 on Apr 3, which is above its
previous level of $41.94 on Mar 15. Shares of the company started
escalating buoyed up by its impressive third fiscal quarter
results, aggressive store expansion strategy, fast recovery in
the auto industry and recent extension of its share buyback
CarMax is one of the largest retailers of used vehicles. The
company pioneered the used car superstore concept with the
inauguration of its first store in 1993. It operated around 117
used car superstores in 58 markets as of December 20, 2012. It
has a market cap of $9.4 billion.
CarMax benefits from its focus on the used-vehicle market, which
will help outgrow peers. Moreover, the company's inventories are
closely aligned with sales trends, which optimize gross profit
per vehicle sold while offering great value to customers.
Currently, it retains a Zacks Rank #3 (Hold).
CarMax reported a 13.9% rise in earnings per share to $0.41 in
the third quarter of fiscal 2013 ended on November 30, 2012 from
$0.36 in the year-ago quarter. Earnings surpassed the Zacks
Consensus Estimate of $0.39 per share.
The company's net sales and operating revenues for the quarter
climbed 15.1% to $2.6 billion from $2.3 billion in the third
quarter of fiscal 2012. Revenues also beat the Zacks Consensus
Estimate of $2.5 billion.
In the first nine months of fiscal 2013, the company opened 8
superstores. The company plans to open 10 superstores in fiscal
In February this year, the Board of Directors of CarMax approved
an extension of its existing share repurchase program to $500
million from $300 million due to its confidence in the business
and ability to deliver its growth objectives. The extended
authorization will expire on Dec 31, 2014.
On Oct 17, 2012, CarMax' board authorized the repurchase of up to
$300 million of its common stock, which was supposed to expire on
Dec 31, 2013. As of Nov 30, 2012, the company had repurchased 1.7
million shares of its common stock for an average price of
$34.53, leaving $239.8 million available for repurchase.
Auto sales in the U.S. rose by 3.4% year-over-year to 1.45
million vehicles in March, the best monthly sales in almost six
years. This translated into a seasonally adjusted rate (SAAR) of
15.27 million units for the year, up about 8.0% from 14.14
million units in the same month of 2012. Better construction
market, cheap financing, strong pent-up demand and improving
consumer confidence continue to fuel sales growth.
All the six major automakers posted a single-digit rise in sales
during the month. Among them,
Honda Motor Co.
) topped in terms of sales growth followed by
General Motors Company
While we remain on the sidelines about CarMax, a stock in the
auto retailers industry that is currently performing well is
O'Reilly Automotive Inc.
) with a Zacks Rank #2 (Buy).
GENERAL MOTORS (GM): Free Stock Analysis
HONDA MOTOR (HMC): Free Stock Analysis Report
CARMAX GP (CC) (KMX): Free Stock Analysis
O REILLY AUTO (ORLY): Free Stock Analysis
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