CarMax Inc. (NYSE:KMX) posted earnings per share of 98 cents in the second quarter of fiscal 2018 (ended Aug 31, 2017), reflecting an increase of 11.4% from 88 cents earned a year ago. Earnings surpassed the Zacks Consensus Estimate of 95 cents as well.
Net sales and operating revenues in the reported quarter rose 9.7% year over year to $4.39 billion. This figure too outshined the Zacks Consensus Estimate of $4.27 billion.
Used vehicle revenues appreciated 11.9% to $3.7 billion in the reported quarter, driven by higher unit sales, which increased 11.1% to 186,081 vehicles. Comparable-store used vehicle unit sales rose 5.3% in the quarter on improved store sales and digital initiatives.
CarMax Inc Price, Consensus and EPS Surprise
Wholesale vehicle revenues dropped 2.3% to $547.8 million in the quarter. Unit sales nudged up 0.4% to 105,508 vehicles. Average selling price of wholesale vehicles declined 3.2% to $4,957.
Other sales and revenues grew 6.4% to $144.7 million. The company’s extended protection plan (EPP) revenues rallied 13.9% to $85.5 million. Gross profit improved 6.9% to $98.6 million.
CarMax Auto Finance (CAF) reported an increase of 12.5% in income to $107.9 million in second-quarter fiscal 2018.
Store Openings
During the second quarter of fiscal 2018, CarMax opened three stores, including two stores in San Francisco, CA and Hartford, CT plus one in Salisbury, MD, a new television market.
The company plans to open 15 more stores within a year, started from Aug 31, 2017 onward.
Share Repurchase Program
In the quarter under review, CarMax spent $156.5 million to repurchase 2.5 million shares under the existing share buyback program. As of Aug 31, 2017, the company had $1.25 billion of authorization remaining under its share repurchase program.
Financial Position
CarMax had cash and cash equivalents of $25.8 million as of Aug 31, 2017, massively down from $316.1 million as of Aug 31, 2016. Long term debt (excluding current position) escalated to $815.8 million as of Aug 31, 2017 from $797.4 million as of Aug 31, 2016.
Price Performance
CarMax has gained 7% of its value year to date versus the 26% decline of its industry.
Zacks Rank & Key Picks
CarMax currently carries a Zacks Rank #2 (Buy).
Some other top-ranked companies in the auto space are Allison Transmission Holdings Inc. (NYSE:ALSN) , Toyota Motor Corporation (NYSE:TM) and Ferrari N.V. (NYSE:RACE) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Expected long-term growth rates of Allison Transmission, Toyota and Ferrari are 10%, 7% and 14.1%, respectively.
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CarMax Inc (KMX): Free Stock Analysis Report
Toyota Motor Corp Ltd Ord (TM): Free Stock Analysis Report
Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report
Ferrari N.V. (RACE): Free Stock Analysis Report
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