CarMax Comfortably Beats Q1 Estimates (KMX)
U.S.’s biggest used-car seller, CarMax Inc. (NYSE: KMX) said on Friday that its fiscal first quarter income jumped 21%, driven by double-digit growth in sales.
The Richmond, Virginia-based Company has consistently posted strong growth in sales in the recent past as U.S. customers chose to buy used vehicles in the backdrop of recession which was followed by fragile macroeconomic environment. However, CarMax acknowledged that a favorable credit environment has helped to drive up sales. 90% of CarMax’s customers received a loan approval from one of its lenders.
The Company said that number used cars sold rose 22% while average selling price rose more than one percent to $19,540.
Comparable-store-sales increased 17%. Comparable- store- sales is a key gauge on retail chain’s performance as it excludes erratic sales figures from those stores that were opened (or shuttered) in last twelve month thereby providing accurate picture on sales trends.
The sales volume in wholesale business rose 6%, helped by larger number of stores.
For the fiscal first quarter ended May 31, CarMax reported net income of $146.7 million or 64 cents a share compared to a profit of $120.7 million or 52 cents a share, in the same quarter of last fiscal year.
Revenue soared 19% to $3.31 billion.
Analysts’ consensus estimate was for earnings of 58 cents a share on revenue of $3.15 billion, according to a data compiled by Thomson Reuters.
Gross margin narrowed to 13.5% from 13.8% in the same period of last year.
Revenue from CarMax’s auto-finance division climbed 16% to $87 million.
Commenting over the results, Credit Sussie wrote in its research note, “The strength (fiscal first quarter results) is impressive given that the sweet spot of returning supply is still a year away.”
Meanwhile, the Company said that it intends to open 10 to 15 new stores in each of next two fiscal years.
Shares edged up in early trade on Friday. In the past twelve months, the stock has gained about 63%. The stock is up 19% since the start of this year.
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Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
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