CarMax (KMX) Q1 Earnings Increase 25.6% Y/Y, Top Estimates

CarMax Inc. (NYSE:KMX) posted earnings per share of $1.13 in the first quarter of fiscal 2018 (ended May 31, 2017), reflecting an increase of 25.6% from 90 cents earned a year ago. Earnings surpassed the Zacks Consensus Estimate of 98 cents as well.

Net sales and operating revenues in the reported quarter rose 10.1% year over year to $4.54 billion. Moreover, the figure also surpassed the Zacks Consensus Estimate of $4.50 billion.

Used vehicle revenues appreciated 12.1% to $3.84 billion in the reported quarter, driven by higher unit sales, which increased 14.1% to 195,273 vehicles. Comparable-store used vehicle unit sales rose 8.2% in the quarter on improved conversion and digital initiatives.

Wholesale vehicle revenues dropped 2.3% to $553.4 million in the quarter. Unit sales almost remained flat at 103,443 vehicles. Average selling price of wholesale vehicles declined 2.9% to $5,113.

Other sales and revenues increased 12.3% to $145.6 million. Its extended protection plan (EPP) revenues grew 20.5% to $91.94 million.
Gross profit improved 13.3% to $648.9 million.

CarMax Auto Finance (CAF) reported an increase of 8.5% in income to $109.4 million in first-quarter fiscal 2018.

CarMax Inc Price, Consensus and EPS Surprise

CarMax Inc Price, Consensus and EPS Surprise | CarMax Inc Quote

Store Openings

During the first quarter of fiscal 2018, CarMax opened three stores. This included two stores in Seattle, WA, a new television market, and one store in Pensacola, FL.

The company plans to open another 16 stores within a year from May 31, 2017.

Share Repurchase Program

In the quarter under review, CarMax spent $182.1 million to repurchase 3 million shares under its existing share-buyback program. As of May 31, 2017, the company had $1.41 billion of authorization remaining under its share-repurchase program.

Financial Position

CarMax had cash and cash equivalents of $60.1 million as of May 31, 2017, up from $52.6 million as of May 31, 2016. Long term debt (excluding current position) increased to $797.7 million as of May 31, 2017, from $597.3 million as of May 31, 2016.

Price Performance

In the last three months, the company’s shares have lost 0.4% while the Zacks categorized Retail/Wholesale-Auto Parts industry declined 15.4%.



Zacks Rank & Key Picks

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

Better-ranked stocks in the auto space include Fox Factory Holding Corp (NASDAQ:FOXF) , General Motors Company (NYSE:GM) and Dana Incorporated (NYSE:DAN) , each sporting a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Expected long-term growth rate for Fox Factory Holding, General Motors and Dana are 15.6%, 9.2% and 3%, respectively.

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