CarMax (KMX) Tops Q3 Earnings Expectations, Lags Sales Mark
CarMax Inc. KMX posted third-quarter fiscal 2024 (ended Nov 30, 2023) adjusted earnings per share of 52 cents, surpassing the Zacks Consensus Estimate of 42 cents. The bottom line improved from 24 cents per share recorded in the year-ago period. The auto retailer registered revenues of $6,149 million for the November-end quarter, which fell short of the Zacks Consensus Estimate of $6,278 million. The top line contracted 5.5% year over year.
CarMax, Inc. Price, Consensus and EPS Surprise
CarMax, Inc. price-consensus-eps-surprise-chart | CarMax, Inc. Quote
Segmental Performance
CarMax’s used-vehicle net sales totaled $4,832.1 million for the reported quarter, down 7.2% year over year, owing to a decline in both retail used units and average selling price (ASP). The metric, however, surpassed our estimate of $4,787.7 million due to higher-than-expected units sold. While the units sold in this segment tailed off 2.9% year over year to 174,766 vehicles, the ASP of used vehicles fell 4.6% from the year-ago quarter to $27,228. Our forecast for units sold and ASP was 178,487 units and $26,824, respectively.
Comparable store used-vehicle units declined 4.1%, while revenues fell 8.3% from the prior-year level. Used-vehicle gross profit per unit (GPU) came in at $2,277, up from the prior-year quarter’s $2,237 and topping our estimate of $2,208.9.
For the fiscal third quarter, wholesale vehicle revenues inched up 1.1% from the year-ago level to $1,165.2 million. The reported figure was above our projection of $1,133.1 million due to higher-than-anticipated units sold. Units sold increased 7.7% to 127,900 (versus our forecast of 120,594), while the ASP dipped 6.7% to $8,674 (versus our estimate of $9,396). Wholesale vehicle GPU came in at $961, down from the year-ago period’s $966, but lagged our estimate of $968.4.
Other sales and revenues increased 1.4% year over year to $151.3 million, exceeding our estimate of $142.5 million. CarMax Auto Finance witnessed a 2.3% year-over-year decline in income to $148.7 million in the November-end quarter.
Other Tidbits
Selling, general and administrative expenses decreased 5.4% from the prior-year quarter to $560 million. The firm had cash/cash equivalents and long-term debt of $605.3 million and $1,605.6 million, respectively, as of Nov 30, 2023.
During the fiscal third quarter, CarMax repurchased shares worth $41.9 million. As of Nov 30, 2023, it had $2.41 billion remaining under the share repurchase authorization.
KMX currently operates more than 240 used car stores. It plans to open four stores in the fourth quarter of fiscal 2024.
KMX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
CarMax’s key peers include O’Reilly Automotive ORLY, Advance Auto Parts AAP and AutoZone AZO.
O’Reilly reported third-quarter 2023 results on Oct 25. Its adjusted earnings per share of $10.72 beat the Zacks Consensus Estimate of $10.36. The bottom line increased from $9.17 in the prior-year quarter. The automotive parts retailer registered quarterly revenues of $4,203.4 million, crossing the Zacks Consensus Estimate of $4,070 million. The top line increased 10.6% year over year. During the quarter, comps grew 8.7%. The company opened 40 new stores in the United States and Mexico. The total store count was 6,111 as of Sep 30, 2023.
ORLY had cash and cash equivalents of $82.6 million at the end of the reported quarter, down from $108.6 million recorded as of 2022-end. Its long-term debt was $5,102.3 million, higher than $4,371.6 million as of Dec 31, 2022.During the reported quarter, O’Reilly generated $866.3 million in cash from operating activities. Capital expenditures totaled $293 million. Free cash flow came in at $564.4 million. Encouragingly, the company lifted its full-year guidance. For 2023, O’Reilly now envisions total revenues in the range of $15.7-$15.8 billion, up from the prior guidance of $15.4-$15.7 billion. Earnings per share are now expected between $37.80 and $38.30, up from the previous estimate of $37.05-$37.55.
Advance Auto posted third-quarter 2023 results on Nov 15. It incurred an adjusted loss of 82 cents per share against adjusted earnings of $1.92 in the year-ago quarter. The reported figure was also in contrast to the Zacks Consensus Estimate of earnings of $1.42 per share. Advance Auto generated net revenues of $2,719 million, which topped the Zacks Consensus Estimate of $2,679 million on higher-than-expected comparable store sales. Comparable store sales increased 1.2%. We projected an increase of 0.2%. The top line increased 2.9% year over year.
Advance Auto had cash and cash equivalents of $317.5 million as of Oct 7, 2023. AAP now estimates 2023 net sales in the band of $11.25-$11.30 billion compared with the previous guided range of $11.25-$11.35 billion. Comparable store sales are projected within a range of negative 0.5% to 0%. The operating income margin is envisioned in the range of 1.8-2%, down from 4-4.3%, guided earlier. The company aims to open 55 to 65 new stores this year, up from the prior guidance of 40 to 60 stores.
AutoZone released first-quarter fiscal 2024 results on Dec 5. It reported earnings of $32.55 per share, up 18.6% year over year. Earnings surpassed the Zacks Consensus Estimate of $31.01 per share. Net sales grew 5.1% year over year to $4,190.3 million. The top line also surpassed the Zacks Consensus Estimate of $4,171.9 million. In the reported quarter, domestic commercial sales totaled $1,092.9 million, up from $1,034.4 million recorded in the year-ago period. Domestic same-store sales (sales at stores open at least for a year) rose 1.2%.
During the quarter, AutoZone opened 17 new stores and closed one store in the United States. It opened five new stores in Mexico and four stores in Brazil. It exited the quarter with 6,316 stores in the United States, 745 in Mexico and 104 in Brazil. The total store count was 7,165 as of Nov 18, 2023. AutoZone had cash and cash equivalents of $282.9 million, up from $269.7 million as of Nov 19, 2022. Its total debt amounted to $8,583.5 million as of Nov 18, 2023, increasing from $6,328.3 million as of Nov 19, 2022.
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