CarMax Earnings Fail to Impress

By Chris Lange Updated Jan 13, 6:34AM EST · Published Jun 21, 9:05AM EDT

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CarMax Earnings Fail to Impress — © Thinkstock

CarMax Inc. (NYSE: KMX) reported its fiscal first-quarter financial results before the markets opened on Tuesday. The company said that it had $0.90 in earnings per share (EPS) on $4.13 billion in revenue. Consensus estimates from Thomson Reuters were $0.92 in EPS on revenue of $4.19 billion. In the same period of last year, it posted EPS of $0.86 and $4.01 billion in revenue.

The comparable store used unit sales rose 0.2% compared to the prior year’s first quarter. The comparable store sales performance reflected the combination of an improvement in conversion that more than offset a decrease in store traffic.

Wholesale vehicle unit sales grew 1.8% versus the first quarter of fiscal 2016, primarily driven by the growth in our store base.

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Total gross profit increased 5.3% versus last year’s first quarter to $572.6 million. Used vehicle gross profit rose 4.1%, driven by the 4.0% increase in total used unit sales.

Compared with last year’s first quarter, CarMax Auto Finance income declined 7.7% to $100.8 million. The decline was due to an increase in the provision for loan losses and a lower total interest margin percentage, partially offset by the effects of an increase in average managed receivables.

On the books, CarMax’s cash and cash equivalents totaled $52.6 million at the end of the quarter, compared to $351.7 million at the end of the same period of last year.

Shares of CarMax closed Monday up 1% at $50.63, with a consensus analyst price target of $60.81 and a 52-week trading range of $41.25 to $69.15. Following the release of the earnings report, the stock was down 4.5% at $48.35 in Tuesday’s premarket.

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About the Author Chris Lange →

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.