CarMax, Inc. | $KMX Stock | Shares Rise On Solid First Quarter Earnings


CarMax, Inc. (NYSE: KMX)


Shares of CarMax are trading near their all-time high record on Friday after the company reported its quarterly earnings results, before the opening bell.

Wall Street had expected the used-car company to report quarterly earnings of $1.24 per share on a revenue of $4.61 billion, but the company went above the estimates.

Wall Street was eagerly watching CarMax results in order to evaluate the state of American consumers, because used vehicles are primary purchased by the middle-class who serve as a reliable gauge.

KMX stock was trading at $79.20 at 11:10 AM after gaining $8.15, or 11.47%. The stock has gained 10.8% since the beginning of the year, while the S&P 500 has climbed 2.9%.

KMX Earnings & Outlook

The company posted a net income of $238.7 million, or $1.33 per share, for the quarter ended May 31. In the same period last year, the company had a net income of $211.7 million, or $1.13 per share.

Revenue came in at $4.79 billion, compared to a revenue figure of $4.54 billion in the year-earlier period.

Analysts had expected earnings per share of $1.24 on a revenue of $4.61 billion, according to Thompson Reuters data.

During the quarter, same-store sales took a dip of 2.3%. The company attributed the drop to lower store traffic.

CarMax did not provide a guidance for its second which comes to an end on August 31. However, the company announced its plans to open a total of 15 stores before May 31, next year.

CarMax CEO Comments

Commenting on the performance, CarMax president and chief executive officer Bill Nash, said, “Total used vehicle unit sales increased 1.6%, while comparable store used unit sales fell 2.3% versus the prior year’s first quarter. The comparable store sales performance primarily reflected lower store traffic, partially offset by improved conversion, as well as a tough comparison as we lapped our strongest prior year performance. While our comparable store unit sales performance improved significantly from the February 2018 quarter, we believe macro pricing factors still had some effect on our first quarter sales.”

CarMax, Inc. Company Profile

CarMax is a retailer of used vehicles headquartered in Richmond, Virginia. It operates under two segments, CarMax Auto Finance and CarMax Sales Operations. The company provides customers with a range of models and makes of used vehicles, which include luxury, domestic, and imported vehicles.

The company also sells vehicles that do not meet its retail standards, through extended protection plans to consumers at the time of sale and on-site wholesale auctions to licensed dealers.

In addition, the company offers vehicle repair and reconditioning services; and financing solutions for retail customers through various financial institutions and CarMax Auto Finance across different credit spectrums.

CarMax operated and managed a total of 189 stores across 41 American states as of April 4, 2018. It competes with KAR Auction Services, Inc. and Cox Enterprises. The company was founded in 1993 by William Austin Ligon and Richard L. Sharp. –Reuters