(Reuters) -Used-car retailer CarMax Inc (NYSE:KMX) topped Wall Street estimates for quarterly profit and revenue as people used their stimulus checks to buy personal vehicles, with public transport losing favor due to pandemic-driven health concerns.
Shares of the company were up 7.2% at $128 in morning trade on Friday, after it said retail used-unit sales doubled to 270,799 units in the first quarter.
Low interest rates, government stimulus and a preference for private vehicles during the COVID-19 pandemic have bolstered demand at auto retailers.
Earlier in the month, the company said it would hire 1,800 employees by summer-end to boost production through reconditioning and preparing vehicles for sale.
"We benefited from the backdrop of a strong demand environment, enhanced by the impact of the most recent round of government stimulus payments," Chief Executive Bill Nash said on a post-earnings call.
Comparable store units rose 99.1% from a year ago, partly helped by a shift in the timing of customer tax refunds.
Morgan Stanley (NYSE:MS) analyst Adam Jonas said in a note that while online car seller Carvana remains the preferred used-car name, the brokerage thinks CarMax has the network capability to be a strong challenger to Carvana over the long run.
"We are very bullish about our future, given the strength and trajectory of our current business and the opportunities to expand into the broader used-auto ecosystem," Chief Financial Officer Enrique Mayor-Mora said.
Net income rose to $436.8 million, or $2.63 per share, in the quarter ended May 31, from $4.98 million, or 3 cents per share, a year ago.
Analysts on average expected the company to report earnings of $1.63 per share, according to Refinitiv data.
Total revenue rose 138% to $7.70 billion, above estimates of $6.24 billion.