Markets

CarMax's (KMX) Q3 Earnings Beat Estimates, Revenues Miss

A generic image of a pen on a chart
Credit: Shutterstock photo

CarMax Inc.KMX posted earnings per share of $1.09 in the third quarter of fiscal 2019 (ended Nov 30, 2018), up 34.6% from 81 cents in the year-ago quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.01.

Net sales and operating revenues in the reported quarter increased 4.6% year over year to $4.3 billion. However, the figure missed the Zacks Consensus Estimate of $4.33 billion. Total gross profit rose 5.6% year over year to $569.2 million.

During the quarter under review, used-vehicle revenues rose 3.6% to $3.5 billion as unit sales increased 2.3% to 173,476 vehicles. The average selling price of used vehicles rose 1.3% to $27,273. Comparable store used-vehicle unit sales declined 1.2%. The downside was primarily caused by lower store traffic, partially offset by improved conversion.

Wholesale vehicle revenues rose 9.2% to $603.6 million in the reported quarter. Unit sales increased 10% to 110,403 vehicles, courtesy of a boost in store base and a higher appraisal buy rate. The average selling price of wholesale vehicles declined 1% to $5,214.

Other sales and revenues increased 12.1% year over year. Moreover, the extended protection plan's (EPP) revenues rose 11.1%.

CarMax Auto Finance ("CAF") reported an increase of 6.7% in income to $109.7 million in the quarter under review, reflecting collective effects of an 8.4% rise in average managed receivables and a slightly lower total interest margin percentage.

CarMax, Inc. Price, Consensus and EPS Surprise

CarMax, Inc. Price, Consensus and EPS Surprise | CarMax, Inc. Quote

Store Openings

During third-quarter fiscal 2019, CarMax opened four stores in new television markets of Wilmington, NC; Lafayette, LA; Corpus Christi, TX; and Shreveport, LA.

Share Repurchase Program

In the quarter under review, CarMax spent $254.3 million to repurchase 3.7 million shares under the existing share buyback program. Also, the board approved a share repurchase extension of $2 billion. As of Nov 30, 2018, the company had $2.38 billion of authorization remaining under its share repurchase program.

Financial Position

CarMax had cash and cash equivalents of $35 million as of Nov 30, 2018, up from $26.3 million as of Nov 30, 2017. Long-term debt (excluding current position) amounted to $992.1 million as of Nov 30, 2018, down from $1.04 billion as of Nov 30, 2017.

Zacks Rank & Stocks to Consider

Currently, CarMax has a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Allison Transmission Holdings, Inc. ALSN , Fox Factory Holding Corp. FOXF and America's Car-Mart, Inc. CRMT , each currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .

Allison Transmission has an expected long-term growth rate of 10%. Over the past six months, shares of the company have increased 2.5%.

Fox Factory has an expected long-term growth rate of 17.9%. Over the past six months, shares of the company have risen 20.5%.

America's Car-Mart has an expected long-term growth rate of 19.5%. Over the past six months, shares of the company have grown 10.1%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CarMax, Inc. (KMX): Free Stock Analysis Report

America's Car-Mart, Inc. (CRMT): Free Stock Analysis Report

Fox Factory Holding Corp. (FOXF): Free Stock Analysis Report

Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

ALSN CRMT KMX FOXF

Other Topics

Earnings Stocks

Latest Markets Videos

    Zacks

    Zacks is the leading investment research firm focusing on stock research, analysis and recommendations. In 1978, our founder discovered the power of earnings estimate revisions to enable profitable investment decisions. Today, that discovery is still the heart of the Zacks Rank. A wealth of resources for individual investors is available at www.zacks.com.

    Learn More