Why CarMax Is Friday’s Big Earnings Winner

By Chris Lange Updated Jan 11, 10:01PM EST · Published Jun 22, 11:45AM EDT

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Why CarMax Is Friday’s Big Earnings Winner — © Thinkstock

CarMax Inc. (NYSE: KMX) released its fiscal first-quarter financial results before the markets opened on Friday. The company posted $1.33 in earnings per share (EPS) and $4.79 billion in revenue. Consensus estimates had called for $1.24 in EPS and revenue of $4.61 billion. The same period of last year reportedly had EPS of $1.13 and $4.54 billion in revenue.

During the quarter, total used unit sales rose by 1.6% from last year, while used comparable sales declined 2.3%. The comparable store sales performance primarily reflected lower store traffic, partially offset by improved conversion, as well as a tough comparison as the firm lapped its strongest prior year performance.

Total wholesale unit sales increased by 9.6%, largely driven by an increase in the appraisal buy rate and the growth in the store base.

Compared with last year’s first quarter, CarMax Auto Finance income increased 5.7% to $115.6 million. The increase reflected the combined effects of an 8.7% increase in average managed receivables and a slightly lower total interest margin percentage.

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The company did not issue any guidance except to say that it plans to open 15 stores within the next 12 months. Consensus estimates from Thomson Reuters for the second quarter are $1.16 in EPS and $4.57 billion in revenue.

Bill Nash, president and CEO, kept it short and sweet:

While our comparable store unit sales performance improved significantly from the February 2018 quarter, we believe macro pricing factors still had some effect on our first quarter sales.

Shares of CarMax were last seen up about 13% at $80.61, with a consensus analyst price target of $74.60 and a 52-week trading range of $57.05 to $80.69.

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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.