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CarMax beats on profit, revenue expectations

Yahoo Finance’s Brian Sozzi, Alexis Christoforous, and Ines Ferre break down the market action for Carmax.

Video Transcript

BRIAN SOZZI: It looks like the used car industry got a big boost this summer thanks to that government stimulus. We're eyeing shares of CarMax after the company posted higher-than-expected sales and profits in the latest earnings report. Ines Ferre is back with the details. And Ines, I, for one, bought a new car. I just didn't buy it at CarMax.

INES FERRE: You always have great cars, Brian. Right. Taking a look right now at CarMax, the stock is down more than 10%. But I will tell you that its earnings per share came in at $1.79, well above what the Street was expecting. Comparable store sales were up 1.2%.

Very important-- the company says it rolled out its omnichannel offerings so that customers had the option to seamlessly do as much buying online or in person as they wish. In the first quarter of fiscal 2021, it did pause a store expansion. CarMax is now resuming that growth and opening [INAUDIBLE] to 10 stores in fiscal 2022.

I want to take a little bit of a look at the sales because total used vehicle unit sales increased 3.9%. Positive comparable unit sales-- used unit sales in both July and August more than offset the high single-digit negative comps that the company says it experienced in June.

And it did say that inventory was a headwind as far as sales was concerned, but the company returned to its targeted inventory levels in September. Just taking a look at CarMax's stock, as I mentioned, it's under pressure right now. But I will say that used cars during the pandemic have done very well. And we saw upgrades the other day from Goldman on Vroom, on Carvana. And those stocks today a bit under pressure as well. Brian.