The company did not offer guidance, but consensus fourth-quarter estimates call for EPS of $0.58 on revenues of $3.46 billion. For the full year, consensus estimates call for EPS of $2.52 on revenues of $14.11 billion.
The percentage of retail vehicles financed by subprime loans offered by third-parties and CarMax dropped from 17.7% a year ago to 15.2% this year. Sequentially, however, the percentage of subprime loans rose from 13.8%.
The company’s CEO said:
Continued strong performance in our used, wholesale and [CarMax Auto Finance] operations, along with the growth of our store base and our ongoing share repurchase program contributed to our record third quarter earnings per share.
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Same-store sales of used vehicles rose 7.4% year-over-year in the third quarter. The company attributed the substantial increase to growth in customer traffic and improved conversion. Total used vehicle sales rose 14% year-over-year.
The company’s auto finance group posted a profit gain of about 6.9% year-over-year. CarMax is also continuing its tests of originating loans for subprime borrowers that the company would typically direct to third-party, subprime lenders for financing. As of the end of November, the company has $56.7 million outstanding in the program, about 21% of which represents loans made in the third quarter.
According to data from the National Automobile Dealers Association (NADA), used car prices were 1.1% higher at the end of November than they were at the end of November 2013, led by a jump of 9.6% in used pickup truck prices.
CarMax shares are up about 9.5% in premarket trading Friday to $66.29, which would be a new 52-week high if it holds. The current 52-week range is $42.54 to $60.66. Thomson Reuters had a consensus analyst price target of around $57.40 before the results were announced.
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