CarMax (NYSE:KMX) Releases Earnings Results

CarMax (NYSE:KMX) released its quarterly earnings data on Wednesday. The company reported $1.31 earnings per share (EPS) for the quarter, beating analysts’ consensus estimates of $0.96 by $0.35, RTT News reports. CarMax had a net margin of 0.96% and a return on equity of 7.00%. The firm had revenue of $8.01 billion for the quarter, compared to analysts’ expectations of $7.42 billion. During the same quarter in the previous year, the company earned $1.38 earnings per share. The company’s revenue for the quarter was up 6.2% compared to the same quarter last year.

Here are the key takeaways from CarMax’s conference call:

• CarMax said first-quarter momentum improved, with total sales up 6.2% to $8 billion and retail unit sales slightly higher year over year, despite tough comparisons. Management said pricing and marketing actions helped sales and expects the trend to continue.
• The company unveiled a new strategy built around four pillars: great offering, easy experience, add value on each transaction, and run lean. Executives emphasized better pricing, tighter digital-to-store integration, and more efficient operations as the main levers.
• SG&A fell 4% and leveraged by 7% per unit, with CarMax saying it is on track to hit its $200 million exit-rate savings target by fiscal 2027. Management said further efficiencies should help fund competitive pricing and business investment.
• CarMax Auto Finance penetration rose to 43.3%, up 150 basis points from last year, while CAF income was essentially stable at $140 million and credit losses were in line with expectations. The company also reiterated that full-spectrum lending remains a key long-term growth driver.
• Executives indicated they are managing GPU more dynamically rather than targeting a fixed level each quarter, with first-quarter GPU down less than previously guided. They expect some variability, but said the goal is to balance sales growth and profitability as pricing becomes more granular and market-based.

CarMax Stock Down 9.2%

Shares of CarMax stock opened at $47.34 on Thursday. The company has a market cap of $6.71 billion, a price-to-earnings ratio of 29.59, a price-to-earnings-growth ratio of 1.97 and a beta of 1.21. The company’s 50 day moving average is $42.36 and its 200 day moving average is $42.45. CarMax has a twelve month low of $30.26 and a twelve month high of $71.99. The company has a quick ratio of 0.49, a current ratio of 2.20 and a debt-to-equity ratio of 2.93.

More CarMax News

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: CarMax beat expectations with Q1 EPS of $1.31 versus $0.96 expected, while revenue rose 6.2% to $8.01 billion. Business Wire earnings release
• Positive Sentiment: Management highlighted early progress under a new four-pillar strategy focused on pricing, digital simplification, cost control, and finance penetration, which may support longer-term improvement. Zacks earnings call article
• Neutral Sentiment: Higher used-vehicle prices and stronger wholesale demand helped revenue, but the market appears to be waiting for clearer evidence that the turnaround can lift margins, not just sales. Reuters revenue estimate article
• Negative Sentiment: Profitability disappointed as price cuts used to stimulate sales pressured margins, and investors reacted negatively to signs that earnings growth may remain constrained. WSJ profit falls article
• Negative Sentiment: The company also secured a $500 million term loan, which may have raised focus on leverage and financing costs, especially given already thin margins. TipRanks term loan article

Institutional Inflows and Outflows

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in the stock. CYBER HORNET ETFs LLC purchased a new stake in CarMax during the second quarter valued at approximately $28,000. MUFG Securities EMEA plc purchased a new stake in shares of CarMax in the second quarter worth $30,000. Advisory Services Network LLC purchased a new stake in shares of CarMax in the third quarter worth $32,000. Ossiam increased its stake in shares of CarMax by 19.5% in the second quarter. Ossiam now owns 1,713 shares of the company’s stock worth $115,000 after purchasing an additional 280 shares in the last quarter. Finally, UMB Bank n.a. increased its stake in shares of CarMax by 336.6% in the fourth quarter. UMB Bank n.a. now owns 2,074 shares of the company’s stock worth $80,000 after purchasing an additional 1,599 shares in the last quarter.

Analysts Set New Price Targets

Several equities analysts recently issued reports on the stock. Argus upgraded shares of CarMax to a “hold” rating in a research report on Thursday, April 16th. Royal Bank Of Canada restated a “sector perform” rating and issued a $41.00 price objective on shares of CarMax in a report on Wednesday, April 15th. Evercore set a $45.00 price objective on shares of CarMax in a report on Friday, April 10th. Wall Street Zen upgraded shares of CarMax from a “sell” rating to a “hold” rating in a report on Saturday, June 13th. Finally, Bank of America restated an “underperform” rating on shares of CarMax in a report on Wednesday. One analyst has rated the stock with a Buy rating, fourteen have assigned a Hold rating and five have given a Sell rating to the stock. According to data from MarketBeat.com, the company currently has an average rating of “Reduce” and an average price target of $42.40.

CarMax Company Profile

CarMax (NYSE: KMX) is a leading retailer of used vehicles in the United States, offering customers a streamlined, no-haggle purchasing experience. The company’s inventory spans a broad range of makes and models, each of which undergoes a comprehensive inspection process before being offered for sale. Customers can shop in person at CarMax’s retail locations or browse the company’s online platform, which provides detailed vehicle histories, virtual tours and contactless purchasing options.

Originally launched in 1993 as a division of Circuit City, CarMax became an independent, publicly traded company in 1997.