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Carvana (CVNA) Q3 Loss Wider Than Expected, Sales Decline
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Carvana Co. (CVNA - Free Report) incurred a loss of $2.67 per share in third-quarter 2022, wider than the Zacks Consensus Estimate of a loss of $2.02. Lower-than-expected sales from used and wholesale vehicle units and lesser-than-anticipated other sales and revenues contributed to the downslide. The company recorded a loss of 38 cents in the year-ago quarter.
Third-quarter revenues of $3,386 million also lagged the Zacks Consensus Estimate of $3,645 million and fell 2.7% year over year.
During the reported quarter, the number of used vehicles sold to retail customers declined 8% to 102,570 from the prior-year period. Total gross profit amounted to $359 million, down 31% year over year. SG&A expenses were $656 million, flaring up 20.1%.
Used vehicle sales totaled $2,492 million in the quarter, rising 6% year over year but falling short of the consensus metric of $2,811 million. Gross profit per unit for used vehicles amounted to $1,131, falling 36.1%.
In the third quarter, wholesale vehicle sales summed $697 million, surging 26.3% year over year but lagging the consensus estimate of $772 million. Gross profit per unit for wholesale vehicles came in at $448, rising 6.7% and outpacing the consensus estimate of $338 million.
In the period under consideration, other sales and revenues fell 29.1% year over year to $197 million and lagged the consensus mark of $221 million. Gross profit per unit came in at $1,921, down 22.6% and missed the consensus mark of $2,090.
Financial Position
Carvana had cash and cash equivalents of $316 million as of Sep 30, 2022, compared with $403 million on Dec 31, 2021. Long-term debt amounted to $6,616 million as of Sep 30, 2022, significantly increasing from $3,208 million recorded on Dec 31, 2021.
Outlook
Carvana did not provide any specific numeric near-term guidance. It noted that by factoring in the current industry, economy and market environment, it shifted its focus on lowering expenses and driving positive free cash flow. For the fourth quarter, Carvana continues to expect a sequential reduction in retail units sold and total GPU on the back of reduced used vehicle industry demand, increasing benchmark interest rates, higher used vehicle depreciation rates and its profitability initiatives.
Cummins has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for CMI’s current-year earnings has been revised 1% upward in the past 30 days.
CarParts has an expected earnings growth rate of 45% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant over the past 30 days.
Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.6% downward over the past 7 days.
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Carvana (CVNA) Q3 Loss Wider Than Expected, Sales Decline
Carvana Co. (CVNA - Free Report) incurred a loss of $2.67 per share in third-quarter 2022, wider than the Zacks Consensus Estimate of a loss of $2.02. Lower-than-expected sales from used and wholesale vehicle units and lesser-than-anticipated other sales and revenues contributed to the downslide. The company recorded a loss of 38 cents in the year-ago quarter.
Third-quarter revenues of $3,386 million also lagged the Zacks Consensus Estimate of $3,645 million and fell 2.7% year over year.
During the reported quarter, the number of used vehicles sold to retail customers declined 8% to 102,570 from the prior-year period. Total gross profit amounted to $359 million, down 31% year over year. SG&A expenses were $656 million, flaring up 20.1%.
Carvana Co. Price, Consensus and EPS Surprise
Carvana Co. price-consensus-eps-surprise-chart | Carvana Co. Quote
Segmental Performance
Used vehicle sales totaled $2,492 million in the quarter, rising 6% year over year but falling short of the consensus metric of $2,811 million. Gross profit per unit for used vehicles amounted to $1,131, falling 36.1%.
In the third quarter, wholesale vehicle sales summed $697 million, surging 26.3% year over year but lagging the consensus estimate of $772 million. Gross profit per unit for wholesale vehicles came in at $448, rising 6.7% and outpacing the consensus estimate of $338 million.
In the period under consideration, other sales and revenues fell 29.1% year over year to $197 million and lagged the consensus mark of $221 million. Gross profit per unit came in at $1,921, down 22.6% and missed the consensus mark of $2,090.
Financial Position
Carvana had cash and cash equivalents of $316 million as of Sep 30, 2022, compared with $403 million on Dec 31, 2021. Long-term debt amounted to $6,616 million as of Sep 30, 2022, significantly increasing from $3,208 million recorded on Dec 31, 2021.
Outlook
Carvana did not provide any specific numeric near-term guidance. It noted that by factoring in the current industry, economy and market environment, it shifted its focus on lowering expenses and driving positive free cash flow. For the fourth quarter, Carvana continues to expect a sequential reduction in retail units sold and total GPU on the back of reduced used vehicle industry demand, increasing benchmark interest rates, higher used vehicle depreciation rates and its profitability initiatives.
Zacks Rank & Key Picks
CVNA currently has a Zacks Rank #3 (Hold).
Some better-ranked players in the auto space are Cummins Inc. (CMI - Free Report) , CarParts.com (PRTS - Free Report) and Genuine Parts Company (GPC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Cummins has an expected earnings growth rate of 18.4% for the current year. The Zacks Consensus Estimate for CMI’s current-year earnings has been revised 1% upward in the past 30 days.
CarParts has an expected earnings growth rate of 45% for the current year. The Zacks Consensus Estimate for current-year earnings has remained constant over the past 30 days.
Genuine Parts has an expected earnings growth rate of 18.1% for the current year. The Zacks Consensus Estimate for current-year earnings has been revised 1.6% downward over the past 7 days.