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Why is CarMax (KMX) Up 9.4% Since Its Last Earnings Report?
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It has been about a month since the last earnings report for CarMax, Inc. (KMX - Free Report) . Shares have added about 9.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is KMX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CarMax's Q1 Earnings & Revenues Beat Estimates, Up Y/Y
CarMax posted adjusted earnings per share of $1.33 in the first quarter of fiscal 2019 (ended May 31, 2018), up 17.7% from $1.13 in the year-ago quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.21.
Net sales and operating revenues in the reported quarter increased 5.5% year over year to $4.79 billion. Also, the figure beat the Zacks Consensus Estimate of $4.63 billion. Total gross profit inched up 1.9% year over year to $661.3 million.
During the reported quarter, used-vehicle revenues rose 4.6% to $4 billion as unit sales gained 1.6% to 198,398 vehicles. The average selling price of used vehicles rose 3% to $20,067. However, comparable store used-vehicle unit sales declined 2.3%. The downside was primarily caused by lower store traffic, partly offset by improved conversion.
Wholesale vehicle revenues rose 11.6% to $617.7 million in the quarter. Unit sales increased 9.6% to 113,335 vehicles, courtesy of a boost in appraisal buy rate and growth in store base. The average selling price of wholesale vehicles rose 1.8% to $5,205.
Other sales and revenues increased 5.7% year over year. Moreover, revenues from the extended protection plan (EPP) rose 8.9%.
CarMax Auto Finance (CAF) reported an increase of 5.7% in income to $115.6 million in the quarter under review, which reflects the collective effects of 8.7% rise in average managed receivables and a slightly lower total interest margin percentage.
Store Openings
During first-quarter fiscal 2019, CarMax opened three stores. The company entered the television market in Greenville, NC, and added two stores in existing television markets (comprising Dallas, TX, and Miami, FL). Further, within 12 months, starting from May 31, 2018, CarMax plans to enter 10 new television markets and expand presence in five existing ones.
Share Repurchase Program
In the quarter under review, CarMax spent $207.4 million to repurchase 3.3 million shares under the existing share buyback program. As of May 31, 2018, the company had $809.5 million of authorization remaining under its share repurchase program.
Financial Position
CarMax had cash and cash equivalents of $76.3 million as of May 31, 2018, up from $60 million as of May 31, 2017. Long-term debt (excluding current position) amounted to $798 million as of May 31, 2018, up from $797 million as of May 31, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter.
At this time, KMX has a nice Growth Score of B, a grade with the same score on the momentum front. The stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise KMX has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Why is CarMax (KMX) Up 9.4% Since Its Last Earnings Report?
It has been about a month since the last earnings report for CarMax, Inc. (KMX - Free Report) . Shares have added about 9.4% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is KMX due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
CarMax's Q1 Earnings & Revenues Beat Estimates, Up Y/Y
CarMax posted adjusted earnings per share of $1.33 in the first quarter of fiscal 2019 (ended May 31, 2018), up 17.7% from $1.13 in the year-ago quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.21.
Net sales and operating revenues in the reported quarter increased 5.5% year over year to $4.79 billion. Also, the figure beat the Zacks Consensus Estimate of $4.63 billion. Total gross profit inched up 1.9% year over year to $661.3 million.
During the reported quarter, used-vehicle revenues rose 4.6% to $4 billion as unit sales gained 1.6% to 198,398 vehicles. The average selling price of used vehicles rose 3% to $20,067. However, comparable store used-vehicle unit sales declined 2.3%. The downside was primarily caused by lower store traffic, partly offset by improved conversion.
Wholesale vehicle revenues rose 11.6% to $617.7 million in the quarter. Unit sales increased 9.6% to 113,335 vehicles, courtesy of a boost in appraisal buy rate and growth in store base. The average selling price of wholesale vehicles rose 1.8% to $5,205.
Other sales and revenues increased 5.7% year over year. Moreover, revenues from the extended protection plan (EPP) rose 8.9%.
CarMax Auto Finance (CAF) reported an increase of 5.7% in income to $115.6 million in the quarter under review, which reflects the collective effects of 8.7% rise in average managed receivables and a slightly lower total interest margin percentage.
Store Openings
During first-quarter fiscal 2019, CarMax opened three stores. The company entered the television market in Greenville, NC, and added two stores in existing television markets (comprising Dallas, TX, and Miami, FL). Further, within 12 months, starting from May 31, 2018, CarMax plans to enter 10 new television markets and expand presence in five existing ones.
Share Repurchase Program
In the quarter under review, CarMax spent $207.4 million to repurchase 3.3 million shares under the existing share buyback program. As of May 31, 2018, the company had $809.5 million of authorization remaining under its share repurchase program.
Financial Position
CarMax had cash and cash equivalents of $76.3 million as of May 31, 2018, up from $60 million as of May 31, 2017. Long-term debt (excluding current position) amounted to $798 million as of May 31, 2018, up from $797 million as of May 31, 2017.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There have been five revisions higher for the current quarter.
CarMax, Inc. Price and Consensus
CarMax, Inc. Price and Consensus | CarMax, Inc. Quote
VGM Scores
At this time, KMX has a nice Growth Score of B, a grade with the same score on the momentum front. The stock was also allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of these revisions looks promising. It comes with little surprise KMX has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.