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CarMax Gains From Robust Used-Car Market, Store Expansion

Zacks Equity Research

We issued an updated research report on CarMax, Inc. KMX on Apr 4.

The company focuses on the used-car market, enabling it to outperform the peers in the industry. During fourth-quarter fiscal 2019, CarMax’s used vehicles sold increased 5.8% primarily due to the robust used-vehicle market. Also, its customer-friendly sales process adds to its competitive advantage in used-vehicle retailing.

Increased sales enabled CarMax to witness a year-over-year increase in revenues and earnings in the fourth quarter of fiscal 2019. Though earnings surpassed the Zacks Consensus Estimate, revenues missed the same during the reported quarter.

Moreover, this Richmond, VA-based retailer of used vehicles is focusing on expansion by opening stores in new and existing markets. This will aid CarMax to reach more customers and drive revenue growth.

During fourth-quarter fiscal 2019, it opened five stores, which includes three in new markets, consisting of Buffalo, NY, Montgomery, AL, and New Orleans, LA. In the current quarter, it plans to open three stores in existing markets.
Over the past month, the company’s stock has seen the Zacks Consensus Estimate for quarterly and annual earnings being revised 3.5% and 0.8% upward, respectively.

Price Performance

In the past six months, CarMax’s stock has increased 1.5%, underperforming 14.6% growth recorded by the industry it belongs to.

 


 

Zacks Rank & Other Key Picks

Currently, CarMax has a Zacks Rank #2 (Buy).

Other top-ranked stocks in the auto space include Ferrari N.V. RACE, General Motors Company GM and Fox Factory Holding Corp. FOXF. While Ferrari currently sports a Zacks Rank #1 (Strong Buy), General Motors and Fox Factory carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Ferrari has an expected long-term growth rate of 18.5%. Shares of the company have gained 30.6% over the past three months.

General Motors’ long-term growth rate is projected at 8.9%. Over the past three months, shares of the company have gained 12.9%.

Fox Factory has an expected long-term growth rate of 15.1%. Over the past three months, shares of the company have risen 24.1%.

Zacks' Top 10 Stocks for 2019

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CarMax, Inc. (KMX) : Free Stock Analysis Report
 
Fox Factory Holding Corp. (FOXF) : Free Stock Analysis Report
 
General Motors Company (GM) : Free Stock Analysis Report
 
Ferrari N.V. (RACE) : Free Stock Analysis Report
 
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