Bullish Outlook
It is estimated that volumes moved up in the most recent quarter, helped by the growing demand for used vehicles at affordable prices. There has been an equally encouraging trend in the company’s wholesale segment. While the positive market conditions are set to lift the bottom-line, it will be partially offset by higher selling, general and administrative expenses. It needs to be noted that typically, the company’s margins do not gain as much as sales do.
Omnichannel Push
The management’s initiatives to enhance the omnichannel capabilities have been paying off, making the facility available to more than one-third of the company’s customers. This, combined with the aggressive store-expansion drive and growing online traffic, should translate into revenue growth. Also, the favorable lending environment is expected to attract customers to the showrooms.
Q2 Outcome
In the second quarter, another strong performance by the Used Vehicle segment, which accounts for more than 80% of the company’s revenue, lifted the top-line to $5.2 billion. Consequently, earnings advanced 13% to $1.40 per share, exceeding the expectations.
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CarMax shares traded slightly below the $100-mark ahead of the quarterly report, which is a record high. The stock gained progressively in recent months and is up 48% since the beginning of the year. In the past six months alone it grew 17%.