What to Expect From CarMax Earnings

By Chris Lange Updated Jan 13, 6:35AM EST · Published Jun 20, 3:47PM EDT

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What to Expect From CarMax Earnings — © Thinkstock

CarMax Inc. (NYSE: KMX) is set to report fiscal first-quarter financial results before the markets open Tuesday. The consensus estimates from Thomson Reuters are calling for $0.92 in earnings per share (EPS) on $4.20 billion in revenue. The same period from last year had $0.86 in EPS on $4.01 billion in revenue.

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.

The company delivered solid revenue and EPS growth in both the fourth quarter and the fiscal year, it opened a record number of stores and made progress toward optimizing its capital structure by buying back 16.3 million shares in fiscal 2016.

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However this has not been enough to prop the stock up for that time alone. CarMax will have to continue to make improvements on the bottom line going forward if it wants to turn positive.

A few analysts weighed in on the company during this quarter prior to the release of the earnings report:

Wedbush reiterated a Hold rating with a $44 price target.
Oppenheimer reiterated a Buy rating with a $60 price target.
Merrill Lynch reiterated a Buy rating.
RBC Capital reiterated a Hold rating.
Deutsche Bank has a Hold rating with a $67 price target.
Morgan Stanley has an Equal Weight rating with a $52 price target.

So far in 2016 CarMax has underperformed the broad markets with the stock down 7%. Over the past 52-weeks, the stock is actually down over 30%.

Shares of CarMax were last trading up 1.6% at $50.94, with a consensus analyst price target of $60.81 and a 52-week trading range of $41.25 to $70.88.

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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.