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Is a Beat in the Cards for CarMax (KMX) in Q1 Earnings?
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CarMax Inc. (KMX - Free Report) is set to report first-quarter fiscal 2019 results, before the market opens on Jun 22. In the last reported quarter, the company recorded an earnings miss of 13.5%. In the trailing four quarters, the company surpassed estimates twice while missing the other two, recording an average beat of 0.9%.
In the past three months, shares of CarMax have outperformed the industry it belongs to. The stock has gained 15.8% compared with the industry’s increase of 11.9%.
Let’s see how things are shaping up for the upcoming announcement.
Our proven model shows that CarMax is likely to beat on earnings this quarter. That is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
Zacks ESP: CarMax has an Earnings ESP of +3.99% as the Most Accurate estimate is pegged at $1.27, higher than the Zacks Consensus Estimate of $1.22. A positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CarMax currently carries a Zacks Rank #3. This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving Better-Than-Expected Earnings?
CarMax pursues an aggressive store expansion initiative. In recent times, the company opened stores in New Hampshire, Colorado, North Carolina, Texas, Florida and New Mexico etc. The store opened in New Hampshire was the first CarMax store in the state. Through these openings, the company is aiming to expand its footprint in new and existing locations, thereby driving its financials.
Also, CarMax focuses more on the used-car market segment, which helps it to do better than its peers. Low prices and customer-friendly sales process in used-vehicle sales, helps the company to stay ahead among others.
Moreover, the company’s stock has seen the Zacks Consensus Estimate for annual earnings being revised 1.2% upward over the last 30 days.
However, significant cash outflows from operations and rising capital expenditure, due to aggressive store openings, are headwinds for the company.
For the soon-to-be-released quarter, the Zacks Consensus Estimate for net sales of wholesale vehicles is pegged at $591 million, with an anticipated vehicle sale of 106,546 units. In fourth-quarter fiscal 2018, actual sales came in at $527.2 million, with 99,226 vehicles sold.
For used-vehicle retail, the Zacks Consensus Estimate for net sales is $4 billion, with projected unit sales of 202,084 vehicles. In the prior quarter, the company recorded net sales of $3.4 billion, with 170,572 units sold.
The Zacks Consensus Estimate for Other sales and revenues are $147 million, whereas the company recorded $128 million in the prior quarter.
Other Stocks to Consider
Here are a few other stocks worth considering, with the right combination of elements to outpace earnings estimates this time around:
CNH Industrial N.V. (CNHI - Free Report) has an Earnings ESP of +17.93% and a Zacks Rank of 3. The company is expected to report second-quarter 2018 results on Jul 25.
Tenneco Inc. has an Earnings ESP of +1.82% and is a #3 Ranked player. Its second-quarter 2018 results are anticipated to be announced on Jul 27.
Allegheny Technologies Incorporated (ATI - Free Report) has an Earnings ESP of +2.00% and has a Zacks Rank of 3. The company is expected to report second-quarter 2018 results on Jul 24.
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Image: Bigstock
Is a Beat in the Cards for CarMax (KMX) in Q1 Earnings?
CarMax Inc. (KMX - Free Report) is set to report first-quarter fiscal 2019 results, before the market opens on Jun 22. In the last reported quarter, the company recorded an earnings miss of 13.5%. In the trailing four quarters, the company surpassed estimates twice while missing the other two, recording an average beat of 0.9%.
In the past three months, shares of CarMax have outperformed the industry it belongs to. The stock has gained 15.8% compared with the industry’s increase of 11.9%.
Let’s see how things are shaping up for the upcoming announcement.
CarMax, Inc. Price and EPS Surprise
CarMax, Inc. Price and EPS Surprise | CarMax, Inc. Quote
Why is a Positive Surprise Likely?
Our proven model shows that CarMax is likely to beat on earnings this quarter. That is because it has the right combination of the two key ingredients — a positive Earnings ESP and a Zacks Rank #3 (Hold) or better — for increasing the odds of an earnings beat.
Zacks ESP: CarMax has an Earnings ESP of +3.99% as the Most Accurate estimate is pegged at $1.27, higher than the Zacks Consensus Estimate of $1.22. A positive ESP indicates a likely earnings surprise. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CarMax currently carries a Zacks Rank #3. This, when combined with a positive ESP, makes us reasonably confident of an earnings beat.
Conversely, we caution against Sell-rated stocks (#4 or 5) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
What’s Driving Better-Than-Expected Earnings?
CarMax pursues an aggressive store expansion initiative. In recent times, the company opened stores in New Hampshire, Colorado, North Carolina, Texas, Florida and New Mexico etc. The store opened in New Hampshire was the first CarMax store in the state. Through these openings, the company is aiming to expand its footprint in new and existing locations, thereby driving its financials.
Also, CarMax focuses more on the used-car market segment, which helps it to do better than its peers. Low prices and customer-friendly sales process in used-vehicle sales, helps the company to stay ahead among others.
Moreover, the company’s stock has seen the Zacks Consensus Estimate for annual earnings being revised 1.2% upward over the last 30 days.
However, significant cash outflows from operations and rising capital expenditure, due to aggressive store openings, are headwinds for the company.
For the soon-to-be-released quarter, the Zacks Consensus Estimate for net sales of wholesale vehicles is pegged at $591 million, with an anticipated vehicle sale of 106,546 units. In fourth-quarter fiscal 2018, actual sales came in at $527.2 million, with 99,226 vehicles sold.
For used-vehicle retail, the Zacks Consensus Estimate for net sales is $4 billion, with projected unit sales of 202,084 vehicles. In the prior quarter, the company recorded net sales of $3.4 billion, with 170,572 units sold.
The Zacks Consensus Estimate for Other sales and revenues are $147 million, whereas the company recorded $128 million in the prior quarter.
Other Stocks to Consider
Here are a few other stocks worth considering, with the right combination of elements to outpace earnings estimates this time around:
CNH Industrial N.V. (CNHI - Free Report) has an Earnings ESP of +17.93% and a Zacks Rank of 3. The company is expected to report second-quarter 2018 results on Jul 25.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Tenneco Inc. has an Earnings ESP of +1.82% and is a #3 Ranked player. Its second-quarter 2018 results are anticipated to be announced on Jul 27.
Allegheny Technologies Incorporated (ATI - Free Report) has an Earnings ESP of +2.00% and has a Zacks Rank of 3. The company is expected to report second-quarter 2018 results on Jul 24.
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>>