FactSet Research (FDS) Q4 Earnings Preview: What's in the Cards?
CarMax Inc. KMX posted adjusted earnings per share of $1.33 in the first quarter of fiscal 2019 (ended May 31, 2018), up 17.7% from $1.13 in the year-ago quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.21.
Net sales and operating revenues in the reported quarter increased 5.5% year over year to $4.79 billion. Also, the figure beat the Zacks Consensus Estimate of $4.63 billion. Total gross profit inched up 1.9% year over year to $661.3 million.
During the quarter, used vehicle revenues rose 4.6% to $4 billion as unit sales gained 1.6% to 198,398 vehicles. The average selling price of used vehicles rose 3% to $20,067. However, comparable store used vehicle unit sales declined 2.3% in the quarter. The downside was primarily caused by lower store traffic and partly offset by improved conversion.
CarMax, Inc. Price, Consensus and EPS Surprise
CarMax, Inc. Price, Consensus and EPS Surprise | CarMax, Inc. Quote
Wholesale vehicle revenues rose 11.6% to $617.7 million in the quarter. Unit sales increased 9.6% to 113,335 vehicles, courtesy of a boost in appraisal buy rate and growth in store base. The average selling price of wholesale vehicles rose 1.8% to $5,205.
Other sales and revenues increased 5.7% year over year. Moreover, the extended protection plan’s (EPP) revenues rose 8.9%.
CarMax Auto Finance (CAF) reported an increase of 5.7% in income to $115.6 million in the quarter under review, which reflects the collective effects of an 8.7% rise in average managed receivables and a slightly lower total interest margin percentage.
During first-quarter fiscal 2019, CarMax opened three stores. The company entered the Greenville, NC television market and added two stores in existing television markets (comprising Dallas, TX and Miami, FL).
Further, within the 12 months starting from May 31, 2018, CarMax plans to enter in 10 new television markets and expand presence in five existing television markets.
Share Repurchase Program
In the quarter under review, CarMax spent $207.4 million to repurchase 3.3 million shares under the existing share buyback program. As of May 31, 2018, the company had $809.5 million of authorization remaining under its share repurchase program.
CarMax had cash and cash equivalents of $76.3 million as of May 31, 2018, up from $60 million as of May 31, 2017. Long-term debt (excluding current position) amounted to $798 million as of May 31, 2018, up from $797 million as of May 31, 2017.
Zacks Rank & Stocks to Consider
Currently, CarMax has a Zacks Rank #3 (Hold). A few better-ranked stocks in the auto space are Ferrari N.V. RACE, Oshkosh Corp. OSK and Toyota Motor Corp. TM. All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Ferrari has an expected long-term growth rate of 17.3%. Shares of the company have risen 65.7% over the past year.
Oshkosh has an expected long-term growth rate of 18.3%. Shares of the company have increased 6.7% over the past year.
Toyota has an expected long-term growth rate of 5.7%. Shares of the company have rallied 29.7% over the past year.
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