CarMax Rises on Mixed Earnings

When CarMax Inc. (NYSE: KMX) released its fiscal third-quarter earnings report before the markets opened on Tuesday, the company posted $0.72 in earnings per share (EPS) and $3.7 billion in revenue. Consensus estimates from Thomson Reuters called for $0.70 in EPS and revenue of $3.75 billion. In the same period of last year, CarMax reported EPS of $0.63 and $3.54 billion in revenue.

CarMax also posted used unit sales in comparable stores as 5.4%, with total used unit sales rising about 9.1%. The comparable store sales performance resulted from increases in both conversion and store traffic.

At the same time, wholesale unit sales declined 2.2% as contributions from the growth in its store base and an improved appraisal buy rate were more than offset by a reduction in appraisal traffic.

CarMax Auto Finance (CAF) income declined 3.2% to $89.4 million. The decline was due primarily to an $11.0 million increase in the provision for loan losses, which resulted from both higher loss experience in recent quarters and the growth in managed receivables.

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During the third quarter of fiscal 2017, CarMax repurchased 3.8 million shares of common stock for $198.7 million, according to its share repurchase program. At the end of the quarter, the company had $1.69 billion remaining available for repurchase under the program.

So far in 2016, CarMax has outperformed the broad markets, with the stock up about 18%.

Shares of CarMax were trading up about 3.9% at $64.77 on Tuesday, with a consensus analyst price target of $62.87 and a 52-week trading range of $41.25 to $64.88.

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