Categories Earnings, Industrials

CarMax likely to get green signal in Q2 on Sept 24

CarMax (NYSE: KMX) is scheduled to report its second-quarter earnings results on Tuesday before the market opens. The top line will be benefited by aggressive store-expansion initiatives, web traffic growth, lending environment, and conversion. The used-car retailer’s leverage of costs and expenses will be reflected in the bottom-line growth.

The company achieves revenue from the sale of used vehicles at retail stores, wholesale vehicles at auctions, extended protection plan and guaranteed asset protection products, as well as from Auto Finance. As of May 31, 2019, CarMax operated 206 used car stores in 102 US television markets, 2 new car franchises, and conducted wholesale auctions at 76 used car stores.

The opening of stores, variable costs related to sales, and share-based compensation expense could drive the selling, general and administrative expenses higher. This will also include continued investments in technology platforms and digital initiatives.

What to expect from CarMax Q2 earnings
Courtesy: CarMax / Facebook post

The company remained at a significant competitive advantage due to the powerful integration of its in-store and online capabilities. In the near term, CarMax anticipates certain inefficiencies in some of its operations as it continues to enhance its omnichannel capabilities.

Analysts expect the company’s earnings to increase by 7.30% to $1.33 per share and revenue will rise by 6.20% to $5.06 billion for the second quarter. The company has surprised investors by beating analysts’ expectations in all of the past four quarters. Majority of the analysts recommended a “hold” rating with an average price target of $97.75.

Read: Nio Q2 earnings preview

For the first quarter, CarMax posted a 12% increase in earnings backed by strong conversion, solid growth in web traffic, and store base growth. Used unit sales in comparable stores increased 9.5% and total used unit sales grew 13%. Total wholesale unit sales rose by 6.6%, largely driven by an increase in appraisal buy rate and the growth in its store base.

Also Read:  Box stock drops after weak Q1, 2020 outlook

During the first quarter of fiscal 2020, CarMax opened three stores, two in new markets at Waco, Texas and McAllen, Texas and one in an existing market at Memphis, Tennessee. The company plans to open 10 stores in the balance of fiscal 2020 and 13 stores in fiscal 2021 with four store opening happening in Q1 2021.

We’re on Flipboard! Follow us to receive the latest stock market, earnings, and financial news at your fingertips

Most Popular

Salesforce (CRM) Q1 2021 earning infographic

Salesforce (NYSE: CRM) reported first-quarter earnings results for fiscal 2021 after the regular trading hours on Thursday. The results were better than analysts' projections. Meanwhile, the stock fell over 3%

A visual dashboard of Nordstrom (JWN) Q1 2020 earnings results

Nordstrom (NYSE: JWN) swung to a loss in the first quarter of 2020 hurt by the COVID-19 related charges. The fashion retailer reported a loss of $3.33 per share compared

A visual representation of Ulta Beauty (ULTA) Q1 2020 earnings results

Ulta Beauty Inc. (NASDAQ: ULTA) reported its financial results for the quarter ended May 2, 2020, on Thursday after the market closes. The results missed analysts' expectations. The company slipped