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Omar Venerio
Omar Venerio
Articles (1708) 

3 Stocks to Watch Thursday

CarMax, Rite Aid and Accenture move on earnings

September 24, 2020 | About:

CarMax

Shares of CarMax Inc. (NYSE:KMX) fell more than 12% on Thursday after releasing its second-quarter results. Revenue of $5.37 billion, which grew 3.3% year over year, exceeded analysts' expectations by $290 million. Earnings per share were $1.79, beating estimates by 73 cents.

President and CEO Bill Nash, had the following to say:

"We are very pleased to report record revenues and profitability this quarter. The talent and commitment of our associates as well as the diversity of our business model allowed us to capitalize on the improved market environment to deliver a record quarter."

The gross profit rose 8.5% to $752.1 million when compared to last year's second quarter. Used vehicle gross profit rose 5.4% due to an increase in total used unit sales and strong execution. Wholesale vehicle gross profit inched up 23% and other gross profit increased 5.8%, reflecting increases in EPP revenues and service department profits, both versus the prior year's quarter.

During the quarter ended June 30, Chuck Akre (Trades, Portfolio) reduced his stake by 04% to 8,154,026 shares, Wallace Weitz (Trades, Portfolio) curbed his position by 5.3% to 650,000 shares and Dodge & Cox trimmed its holding by 54% to 4,400 shares. On the other hand, Joel Greenblatt (Trades, Portfolio) initiated a new position of 17,411 shares.

Rite Aid

Shares of Rite Aid Corp. (NYSE:RAD) fell more than 17% after the company posted second-quarter results. Revenue grew 11.4% from the prior-year quarter to $5.98 billion, beating projections by $240 million. The company posted a loss of 25 cents per share, falling 15 cents short of analysts' estimates.

In a statement, President and CEO Heyward Donigan said:

"I am so proud of our 50,000 associates and how they are working together each and every day to deliver operational excellence and help our customers to not just get healthy, but get thriving. Together, we are building a strong foundation for sustainable growth and setting the stage to engage with consumers in ways never before seen in health care. A whole new Rite Aid is coming to life, and I'm excited to continue our journey to become a dominant mid-market PBM, unlock the value of our pharmacists and revitalize our retail and digital experiences."

Adjusted earnings before interest, taxes, depreciation and amortization from continuing operations reached $151.6 million, or 2.5% of revenue, higher than $134.2 million, or 2.5% of revenue, in the comparable period of the previous year. The increase was due to higher revenues and a reduction in selling, general and administrative expenses.

Looking ahead to fiscal 2021, the company expects revenue to be between $23.5 billion and $24.0 billion. It also projects a net loss between $190 million and $140 million, with an adjusted Ebitda in the range of $475 million to $525 million. Adjusted net income per share is expected to range from a loss of 67 cents to earnings of 9 cents per share.

During the quarter ended June 30, Joel Greenblatt (Trades, Portfolio) cut his investment by 27% to 77,104 shares.

Accenture

Shares of Accenture PLC (NYSE:ACN) fell more than 6% after announcing fourth-quarter results. The company posted earnings of $1.99 per share and $10.84 billion in revenues, a 2% year-over-year decline. The company beat earnings estimates by 26 cents, but revenue expectations fell $90 million short.

Looking forward to fiscal 2021, the company expects revenue growth between 2% and 5% and GAAP diluted earnings per share in the range of $7.80 to $8.10.

During the quarter ended June 30, Ken Fisher (Trades, Portfolio) reduced his holding by 42% to 1,239 shares and Joel Greenblatt (Trades, Portfolio) curbed his investment by 63% to 28,694 shares. Ron Baron (Trades, Portfolio) boosted his position by 20% to 3,752 shares and Robert Olstein (Trades, Portfolio) initiated a new holding of 8,000 shares.

Disclosure: The author holds no position in any stocks mentioned.

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About the author:

Omar Venerio
Omar Venerio is a capital markets, derivatives, corporate finance and financial management professor and Area Head of Finance. He is passionate about the stock market and providing independent fundamental research and hedge fund and insider trading-focused investigation.

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