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Will CAF Business Pull Down CarMax (KMX) Earnings in Q1?
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CarMax Inc. (KMX - Free Report) is slated to report first-quarter fiscal 2018 (ended May 31, 2017) results on Jun 21, before the opening bell. Last quarter, this Richmond, VA-based specialty retailer of used and new vehicles delivered a positive earnings surprise of 2.53%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
CarMax has been facing dwindling sales in the CarMax Auto Finance (CAF) business. In fiscal 2017, revenues from the segment declined 5.9% year over year. This decline was due to a rise in provision for loan losses, partly offset by the impact of a rise in average managed receivables.
For the company, capital expenditures for fiscal 2017 were $418.1 million, up around 34.5% year over year. Also, the company expects capital expenditures of roughly $325 million for fiscal 2018.
However, CarMax’s focus on the used-vehicle market, aggressive store-expansion and share repurchases should help the company outperform its peers.
Our proven model does not conclusively show that CarMax is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP for CarMax is currently -1.02% as the Most Accurate estimate of 97 cents is below the Zacks Consensus Estimate of 98 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CarMax carries a Zacks Rank #3.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Price Performance
Shares of the company outperformed the Zacks categorized Retail/Wholesale-Auto Parts industry in the last three months. The company’s shares have lost 0.8% while the industry has declined 14.1%.
Expected long-term growth rate for Allison Transmission, Dana and Ferrari are 11%, 3% and 14.1%, respectively.
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Will CAF Business Pull Down CarMax (KMX) Earnings in Q1?
CarMax Inc. (KMX - Free Report) is slated to report first-quarter fiscal 2018 (ended May 31, 2017) results on Jun 21, before the opening bell. Last quarter, this Richmond, VA-based specialty retailer of used and new vehicles delivered a positive earnings surprise of 2.53%.
Let’s see how things are shaping up prior to this announcement.
Factors to Consider
CarMax has been facing dwindling sales in the CarMax Auto Finance (CAF) business. In fiscal 2017, revenues from the segment declined 5.9% year over year. This decline was due to a rise in provision for loan losses, partly offset by the impact of a rise in average managed receivables.
For the company, capital expenditures for fiscal 2017 were $418.1 million, up around 34.5% year over year. Also, the company expects capital expenditures of roughly $325 million for fiscal 2018.
However, CarMax’s focus on the used-vehicle market, aggressive store-expansion and share repurchases should help the company outperform its peers.
CarMax Inc Price and EPS Surprise
CarMax Inc Price and EPS Surprise | CarMax Inc Quote
Earnings Whispers
Our proven model does not conclusively show that CarMax is likely to beat estimates this earnings season. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. This is not the case here, as you will see below:
Zacks ESP: The Earnings ESP for CarMax is currently -1.02% as the Most Accurate estimate of 97 cents is below the Zacks Consensus Estimate of 98 cents. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CarMax carries a Zacks Rank #3.
Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Price Performance
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Shares of the company outperformed the Zacks categorized Retail/Wholesale-Auto Parts industry in the last three months. The company’s shares have lost 0.8% while the industry has declined 14.1%.
Stocks to Consider
Some better-ranked stocks in the auto space include Allison Transmission Holdings Inc. (ALSN - Free Report) , Dana Incorporated (DAN - Free Report) and Ferrari N.V. (RACE - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Expected long-term growth rate for Allison Transmission, Dana and Ferrari are 11%, 3% and 14.1%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>