Cars and Drivers

What to Look for in CarMax Earnings

Chris Lange

Published: April 6, 2016 1:35 pm

Last Updated: January 13, 2020 11:04 am

CarMax Inc. (NYSE: KMX) is scheduled to release its fiscal fourth-quarter financial results before the markets open on Thursday. The consensus estimates from Thomson Reuters are calling for $0.71 in earnings per share (EPS) on $3.68 billion in revenue. The same period from the previous year had $0.67 in EPS on $3.51 billion in revenue.

This stock is currently posting a loss for 2016. But this might prove to be a buying opportunity, one key analyst believes. The stock dropped to a 52-week low in February and is down significantly on a year-over-year basis as well. Many analysts are calling this a stock pickers market, and investors could stand to bottom fish stocks near their lows as opposed to looking for a bottom on the market as a whole.

CarMax has struggled lately as the combination of dislocations in the truck and sport utility vehicle (SUV) market and more challenging comparisons have weighed on used car unit comp growth at the chain. Although headwinds persist, analysts are optimistic that shares now largely seem to discount for nearer term challenges and that used car sales growth at CarMax should rebound as 2016 progresses.

A few analysts weighed in on CarMax prior to the release of the earnings report:

• Morgan Stanley has an Equal Weight rating and a $52 price target.
• Sterne Agee CRT has a Neutral rating.
• Wolfe Research has an Underperform rating.
• Northcoast Research has a Neutral rating.

So far in 2016, CarMax has underperformed the broad markets with the stock down 5%. However, over the past year the stock has dropped about 31%.

Shares of CarMax were trading up 3% at $52.86 on Wednesday, with a consensus analyst price target of $62.35 and a 52-week trading range of $41.25 to $74.55.