>
  1. How to use GuruFocus - Tutorials
  2. What Is in the GuruFocus Premium Membership?
  3. A DIY Guide on How to Invest Using Guru Strategies
Mayank Marwah
Mayank Marwah
Articles (1028) 

CarMax's 3rd-Quarter Earnings Blew Away Expectations

Used and wholesale vehicle sales soared during the quarter

December 22, 2020 | About:

CarMax Inc. (NYSE:KMX) released its third-quarter fiscal 2021 results before the market opened on Dec. 22. The company's earnings and revenue topped projections as auto sales rebounded.

Shares of the stock plunged 2.35% to $98.10 in pre-market trading following the earnings release.

By the numbers

The Richmond, Virginia-based used car retailer recorded earnings per share of $1.42 in the quarter, which reflected 36.5% growth year over year. Analysts had projected EPS of $1.11. Revenue of billion $5.18 billion grew 8.2% from the prior-year quarter and surpassed estimates of $4.98 billion.

President and CEO Bill Nash commented the following on the company's performance:

"Despite the near-term market challenges due to the trajectory of the pandemic, our fundamentals remain robust and reflect the strength of our diversified business model spanning retail, wholesale, and auto finance. This strength, combined with our emerging omni-channel experience, is a unique advantage in the used car industry that firmly positions us to continue growing our market share while creating shareholder value over the long-term."

Used and wholesale vehicle sales

Used car units sales were up 1% year-over-year in the reported quarter. This included a comparable store used unit sales decline of 0.8%. This was only partially negated by solid growth in online traffic.

Total wholesale vehicle unit sales gained 10.8% thanks to an increase in appraisal buy rate, which was only partly offset by the lower appraisal traffic.

Key insights

CarMax's comparable store used unit sales witnessed solid growth in the first week of March. In April, the company furloughed as many as 15,000 employees. In order to cut costs, the CEO waived 50% of his salary. The company cut back its marketing spending as well.

As far as the third quarter is concerned, no new stores were rolled out. However, the used car dealership chain has resumed construction activity on new stores.

To help customers shop online, the company engaged more than 750 people at its five customer experience centers (CEC) located in Atlanta, Kansas City, Raleigh, Phoenix and Richmond.

Financials and share repurchases

The company's balance of cash and cash equivalents stood at $236.6 million at the quarter's end. Long-term debt (barring current maturities) amounted to $1.3 billion.

During the third quarter, the company bought back 1.2 million shares valued at $109.2 million and is authorized to buy back 1.4 billion of common stock.

Guidance

The company did not issue guidance figures for earnings and revenue. For full-year fiscal 2022, the company looks forward to opening around eight to 10 stores.

Disclosure: I do not hold any positions in the stocks mentioned.

Read more here:

Not a Premium Member of GuruFocus? Sign up for a free 7-day trial here.

About the author:

Mayank Marwah
A seasoned writer with keen interest in the automotive, technology, telecommunication, retail and aerospace sectors.

Rating: 0.0/5 (0 votes)

Comments

Please leave your comment:



Performances of the stocks mentioned by Mayank Marwah


User Generated Screeners


pjmason14Momentum
wigbertHigh FCF-M2
kosalmmuse6
kosalmmuseBest one1
DBrizanall 2019Feb26
kosalmmuseBest one
DBrizanall 2019Feb25
kosalmmuseNice
kosalmmusehan
MsDale*52-Week Low
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)