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CarMax (KMX) Q1 Earnings & Sales Top Estimates, Down Y/Y

CarMax Inc. KMX posted first-quarter fiscal 2021 (ended May 31, 2020) net earnings per share of 3 cents against the Zacks Consensus Estimate of a loss of 6 cents. The outperformance can be attributed to higher-than-expected revenues from used vehicles. Precisely, used-vehicle sales totaled $2786.2 million, surpassing the consensus mark of $1,281 million. A profit of $1.59 per share was reported in the year-ago quarter.

Net sales in the reported quarter decreased 39.8% year over year to $3,228.8 million. The top line, however, beat the Zacks Consensus Estimate of $2,607 million. Total gross profit slid 52.3% year over year to $354.2 million.

In first-quarter fiscal 2021, CarMax opened four stores in its existing markets, Tampa, Philadelphia, New Orleans and Los Angeles.

CarMax, Inc. Price, Consensus and EPS Surprise


CarMax, Inc. Price, Consensus and EPS Surprise
CarMax, Inc. Price, Consensus and EPS Surprise

CarMax, Inc. price-consensus-eps-surprise-chart | CarMax, Inc. Quote

Segmental Performance

During the quarter under review, CarMax’s used-vehicle sales declined 38.6% from the prior-year period to $2,786.2 million due to store closures and lower footfall amid coronavirus-induced lockdown. The units sold fell 39.8% year over year to 135,028 vehicles. The average selling price of used vehicles increased 1.5% from the year-ago quarter to $20,346. Used-vehicle gross profit per unit came in at $1,937 compared with $2,215 in the year-ago period. Comparable store used-vehicle units and revenues dropped 41.8% and 40.8%, respectively, from the prior-year level.

Wholesale vehicle revenues plummeted 48.2% from the year-ago period to $342.9 million in the reported quarter. Units sold also plunged 47.6% year over year to 63,295 vehicles due to lower traffic and a reduction in the appraisal buy rate. The average selling price of wholesale vehicles was down 2% from the prior-year quarter to $5,110. Wholesale vehicle gross profit per unit came in at $978 versus $1,043 in the year-ago period.

Other sales and revenues decreased 38.9% year over year to $99.7 million in the fiscal first quarter, primarily owing to a reduction in extended protection plan revenues, which declined 34.1% from the year-ago level to $73.4 million.

CarMax Auto Finance reported a 56.1% year-over-year plunge in income to $51 million in the quarter amid higher loan loss provision.Provision for loan losses increased to $122 million from $38.2 million in the prior year quarter.

Costs, Financials and Share Buyback

Selling, general and administrative expenses fell 23.7% from the prior-year quarter to $373.7 million. CarMax had cash and cash equivalents of $658 million as of May 31, 2020 and $1.08 billion of unused capacity on the credit revolver. Long-term debt amounted to $1,705.1 million, reflecting a decrease from $1,789.5 million in the year-ago period.

In the wake of coronavirus-induced uncertainty, CarMax tapped brakes in the stock buyback program. Prior to suspension of buybacks, the firm spent $40.7 million to repurchase 515,500 shares during first-quarter fiscal 2021. As of May 31, 2020, it had $1.51 billion remaining under the share-repurchase authorization.

Zacks Rank & Stocks to Consider

CarMax currently carries Zacks Rank #3 (Hold).

Some better-ranked stocks in the same sector include Tesla, Inc. TSLA, Arcimoto, Inc. FUV and Niu Technologies NIU, each carrying a Zack Rank of 2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have appreciated 140% year to date compared with the industry’s 38.9% rally.

Shares of Arcimoto have gained 121.7% year to date against the industry’s 13.7% decline.

Shares of Niu have gained 68.2% year to date against the industry’s 13.4% fall.

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