CarMax's (KMX) Q1 Earnings And Revenues Miss Estimates

CarMax Inc. (NYSE:KMX) posted earnings per share of 90 cents in the first quarter of fiscal 2017 (ended May 31, 2016), highlighting an increase of 4.7% from 86 cents earned a year ago. However, earnings missed the Zacks Consensus Estimate of 92 cents.

Net sales and operating revenues in the reported quarter rose 2.8% year over year to $4.13 billion. However, the figure lagged the Zacks Consensus Estimate of $4.22 billion.

Used vehicle revenues appreciated 4.1% to $3.4 billion in the reported quarter, driven by higher unit sales. Unit sales of used vehicles increased 4% to 171,076 vehicles. Comparable-store used vehicle unit sales inched up 0.2% in the quarter on improved conversion, partially offset by a decrease in store traffic.

Wholesale vehicle revenues dropped 1.5% to $567.7 million in the quarter. Unit sales rose 1.8% to 103,462 vehicles, backed by growth in store base. Average selling price of wholesale vehicles went down 3.3% to $5,268.

Other sales and revenues decreased 10.9% to $129.7 million. Extended protection plan (“EPP”) revenues grew 6.3% to $76.2 million.

Gross profit improved 5.3% to $572.6 million from $543.8 million in the year-ago quarter.

CARMAX GP (CC) Price and Consensus

CARMAX GP (CC) Price and Consensus | CARMAX GP (CC) Quote

CarMax Auto Finance (CAF)

CAF reported a 7.7% decrease in income to $100.8 million in first-quarter fiscal 2017 from $109.1 million a year ago. This resulted from an increase in the provision for loan losses and a decline in total interest margin percentage, partially offset by the effects of an increase in average managed receivables.

Store Openings

During the first quarter of fiscal 2017, CarMax opened 2 stores in new markets (one in Springfield, IL and one in San Francisco, CA). Subsequent to the end of the quarter, the company opened a store in the El Paso, TX market.

In fiscal 2017, the company plans to open 15 stores. It also intends to open 13–16 superstores in fiscal 2018.

Share Repurchase Program

During the quarter under review, CarMax spent $132 million to repurchase 2.6 million shares under its existing share buyback program. As of May 31, 2016, the company had $1.27 billion of authorization remaining under its share repurchase program.

Financial Position

CarMax had cash and cash equivalents of $52.6 million as of May 31, 2016, down from $351.7 million as of May 31, 2015. Total debt rose to $598.5 million as of May 31, 2016, from $299.8 million as of May 31, 2015.

In the first quarter of fiscal 2017, CarMax had a cash flow of $85.4 million from operations, compared with $117.6 million in the prior-year period. Capital expenditures totaled $97.5 million in the first quarter of fiscal 2017, up from $59.4 million a year ago. Meanwhile, the company projects capital expenditures of around $450 million for fiscal 2017.

Zacks Rank

CarMax currently carries a Zacks Rank #3 (Hold).

Some better-ranked automobile stocks include Lear Corp. (NYSE:LEA) , Oshkosh Corporation (NYSE:OSK) and Superior Industries International, Inc. (NYSE:SUP) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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