Shares of CarMax Inc. KMX hit a new 52-week low of $50.57 on Dec 18 after the company reported a 1.4% decline in net income in the third quarter of fiscal 2016, ended Nov 30, 2015. The share price recovered marginally later in the day to close at $53.49, down 6.4% from the previous trading session.
Investors were disappointed by CarMax’s financial report as both earnings per share and revenues fell short of estimates despite increasing year over year. CarMax posted earnings per share of 63 cents in the third quarter of fiscal 2016, registering an increase of 5% from 60 cents earned a year ago. However, earnings missed the Zacks Consensus Estimate of 68 cents. The improvement in the bottom line was driven by lower shares outstanding, which offset the 1.4% decline in net income to $128.2 million.
Net sales and operating revenues in the reported quarter increased 4.1% year over year to $3.54 billion, but fell short of the Zacks Consensus Estimate of $3.62 billion. The year-over-year rise was mainly driven by increased used vehicle and wholesale vehicle sales.
However, comparable-store used vehicle unit sales dipped 0.8% in the quarter due to lower store traffic.
Further, new vehicle revenues decreased 22.5% to $42.3 million owing to a 21.6% decline in unit sales to 1,576 vehicles. Also, the average selling price of new vehicles dropped 1.2% to $26,720.
All these negatives pulled down CarMax’s stock to a 52-week low early in the trading session on Dec 18.
Zacks Rank
CarMax currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the same industry include General Motors Co. GM, O'Reilly Automotive Inc. ORLY and U.S. Auto Parts Network, Inc. PRTS. All these stocks currently carry a Zacks Rank #2 (Buy).
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