CarMax Hits 52-Week High on Store Expansion, Buybacks
On Nov 28, 2014, shares of CarMax Inc. (KMX) reached a 52-week high of $57.28, before eventually closing at $56.98. The closing price represents a year-to-date return of 21.5%.
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CarMax focuses on its store-expansion policy due to improvements in the U.S. sales environment. In fiscal 2014, the company opened 13 superstores. During the first half of fiscal 2015, CarMax opened eight stores. Recently, the company opened its second store in Raleigh, NC.
The company intends to open 13 used-car superstores in fiscal 2015 and 10–15 superstores in each of the next two fiscal years. As of Nov 19, 2014, the company operated 143 used-car superstores across 71 markets.
CarMax consistently enhances shareholder value through buybacks. In Oct 2014, the company approved a $2 billion addition to its share repurchase program. The expanded authorization is effective immediately and will expire on Dec 31, 2016. Since the initial announcement of a repurchase program in Oct 2012, CarMax has authorized share repurchase of $3.8 billion. As of Aug 31, 2014, the company had repurchased $893 million worth of shares.
CarMax reported a strong year-over-year increase in earnings and revenues in the second quarter of fiscal 2015, driven by increased used-vehicle, new-vehicle and wholesale-vehicle sales.
CarMax posted earnings per share of 64 cents in the second quarter of fiscal 2015, ended Aug 31, 2014, highlighting an increase of 3.2% from 62 cents a year ago. Net sales and operating revenues in the quarter rose 10.9% year over year to $3.60 billion, exceeding the Zacks Consensus Estimate of $3.55 billion.
Currently, CarMax carries a Zacks Rank #3 (Hold).
Better-ranked automobile stocks worth considering include Gentex Corp. (GNTX), STRATTEC Security Corp. (STRT) and O'Reilly Automotive Inc. (ORLY). Both Gentex and STRATTEC Security sport a Zacks Rank #1 (Strong Buy), while O'Reilly Automotive carries a Zacks Rank #2 (Buy).
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