On Friday, CarMax Inc. (KMX, Financial) shares jumped over 6% on the release of a record-setting earnings report for its first quarter of fiscal 2022.
The used car giant reported net revenue of $7.70 billion that beat the company’s record first quarter in fiscal year 2020 by 43% and were up 138.4% compared to the year-ago quarter. Net earnings per diluted share of $2.63 beat the prior-year quarter by 65%.
CarMax (KMX, Financial) grew retail vehicles sales by 100.6% compared to the year-ago quarter to a total of 270,799 units. The increase in sales saw comparable store used unit sales grow by 99.1% year over year. Retail sales were supported by federal stimulus checks and tax refunds alongside the company’s rapidly evolving omni-channel customer experience.
Total wholesale unit sales ended at 181,389 for the quarter and represented a 186.6% growth compared to the same quarter last year. Wholesale sales benefited largely from an increase in appraisal volume thanks to the company’s online offerings and an increase in overall market prices.
Gross profit per retail used unit totalled $2,205 for the quarter, representing an increase of $268 per unit compared to last year. Wholesale gross profit per unit grew only $47 year over year to $1,025 per unit.
The company also purchased 341,275 vehicles from consumers, which represented a 236% increase compared to the year-ago quarter. The report highlighted the company’s ability to offer nationwide online instant appraisal offerings as crucial to becoming the largest online buyer of vehicles.
The CarMax Auto Finance (CAF) program saw income increase to $241.7 million for the quarter. According to the company’s report, the increase was driven by favorable loan loss performance, a higher net interest margin and an increase in average managed receivables.
“We delivered exceptional results in the first quarter thanks to excellent execution by our team in a high demand environment,” Bill Nash, president and CEO, said. “Our strong performance, which included record net revenues and profitability, reflects the strength of our omni-channel experience and diversified business model across retail, wholesale and CAF.”
The company introduced two new locations in its existing Florida market during the quarter. Through the company’s 2022 fiscal year, an additional eight new locations are expected to open for a total of 10 new locations opened during the year.
The company also repurchased one million shares during the quarter for $124.5 million. As of May 31, the company retains $1.21 billion in outstanding authorization for share repurchasing.
Looking to the future, CarMax has long-term targets of $33 billion in revenue across two million units sold per year by fiscal year 2026. The report also highlighted the desire to grow market share of sales of used cars between zero and 10 years old to more than 5% by 2025.
As of June 25, CarMax stock was trading at $127.06 per share, up 6.39%, with a market cap of $20.71 billion. According to the GF Value Line, the shares are trading at a significantly overvalued rating.
Top gurus invested in CarMax include Wallace Weitz (Trades, Portfolio), Chuck Akre (Trades, Portfolio) and Primecap Management (Trades, Portfolio).
