CarMax (KMX) Q2 Earnings & Revenues Beat Estimates, Up Y/Y
CarMax Inc. KMX has posted earnings per share of $1.24 in the second quarter of fiscal 2019 (ended Aug 31, 2018), up 26.5% from 98 cents in the year-ago quarter. Moreover, earnings surpassed the Zacks Consensus Estimate of $1.22.
Net sales and operating revenues in the reported quarter increased 8.6% year over year to $4.77 billion. Further, the figure beat the Zacks Consensus Estimate of $4.71 billion. Total gross profit rose 7.7% year over year to $650.6 million.
During the quarter under review, used-vehicle revenues rose 7.6% to $4 billion as unit sales gained 5.8% to 196,880 vehicles. The average selling price of used vehicles rose 1.7% to $20,005. Comparable store used-vehicle unit sales rose 2.1%. The upside was primarily caused by improved conversion and was partly offset by lower store traffic.
Wholesale vehicle revenues rose 14.6% to $628 million in the reported quarter. Unit sales increased 14.6% to 120,866 vehicles, courtesy of boost in appraisal traffic, appraisal buy rate and growth in store base. The average selling price of wholesale vehicles remained almost unchanged at $4,955.
Other sales and revenues increased 12.4% year over year. Moreover, the extended protection plan’s (EPP) revenues rose 15.2%.
CarMax Auto Finance (“CAF”) reported an increase of 1.6% in income to $109.7 million in the quarter under review, reflecting collective effects of 8.7% rise in average managed receivables, increase in the provision for loan losses and slightly lower total interest margin percentage.
CarMax, Inc. Price, Consensus and EPS Surprise
CarMax, Inc. Price, Consensus and EPS Surprise | CarMax, Inc. Quote
During second-quarter fiscal 2019, CarMax opened three stores. The company entered the television market in Macon, GA, and added two stores in existing television markets (comprising Albuquerque, NM, and Oklahoma City, OK).
Further, within 12 months, starting from Aug 31, 2018, CarMax plans to enter 10 new television markets and expand presence in five existing ones.
Share Repurchase Program
In the quarter under review, CarMax spent $171.2 million to repurchase 2.3 million shares under the existing share buyback program. As of Aug 31, 2018, the company had $638.3 million of authorization remaining under its share repurchase program.
CarMax had cash and cash equivalents of $37.1 million as of Aug 31, 2018, up from $25.8 million as of Aug 31, 2017. Long-term debt (excluding current position) amounted to $840.2 million as of Aug 31, 2018, up from $815.8 million as of Aug 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 Fox Factory Holding Corporation FOXF, Allison Transmission Holdings, Inc. ALSN and Oshkosh Corporation OSK. While Fox Factory and Allison Transmission currently sport a Zacks Rank #1 (Strong Buy), Oshkosh carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fox Factory has an expected long-term growth rate of 16.8%. Over a year, shares of the company have soared 62.3%.
Allison Transmission has an expected long-term growth rate of 10%. Over the past year, shares of the company have surged 40.8%.
Oshkosh has an expected long-term growth rate of 18.3%. Over the past three months, shares of the company have risen 4%.
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