CarMax Inc. (KMX), headquartered in Richmond, VA, operates as a specialty retailer of used vehicles as well as new vehicles. The company is poised to benefit from its focus on the used-car market, which helps it to outperform the industry. CarMax is among the strongest operators in its peer group.
Furthermore, the company’s pursues an aggressive store growth policy, driven by improvement in the sales environment in the U.S. New stores help the company to penetrate into new markets and thus, boost its results. However, rising competition in the used-car market is highly challenging for the company.
Estimate Trend & Surprise History
Investors should also note the recent earnings estimate revisions for CarMax as the Zacks Consensus Estimate has inched down to 68 cents from 69 cents over the past week.
However, the company has a history of delivering positive earnings surprises. It has beaten the Zacks Consensus Estimate in each of the trailing 4 quarters with an average beat of around 6.49%. Thus investors have been eagerly awaiting CarMax latest earnings report.
We have highlighted some of the key stats from this just-revealed announcement below:
Earnings Miss
CarMax’s earnings increased 5% to 63 cents per share in the third quarter of fiscal 2016, missing the Zacks Consensus Estimate of 68 cents.
Revenues Miss
CarMax reported revenues of $3.54 billion, up 4.1% year over year. Revenues however missed the Zacks Consensus Estimate of $3.62 billion. The year-over-year improvement was mainly driven by increased used vehicle and wholesale vehicle sales.
Key Stats/Developments to Note
During the third quarter of fiscal 2016, CarMax opened 2 stores and relocated one store. Subsequent to the end of the quarter, the company entered the Boston market with two stores. As of Nov 30, 2015, CarMax had 155 used car stores.
Zacks Rank
Currently, CarMax has a Zacks Rank #3 (Hold), but that could change following its earnings report which has just released.
Market Reaction
CarMax’s share price was inactive in pre-market trading following the release. It would be interesting to see how the market reacts to the results during the trading session today.
(We are reissuing this article to correct a mistake. The original article, issued December 18, 2015, should no longer be relied upon.)
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