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Factors Influencing CarMax's (KMX) Earnings This Season

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CarMax Inc. (KMX - Free Report) is slated to release first-quarter fiscal 2022 results on Jun 25, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at $1.61 per share and $6.19 billion, respectively.

The used car dealership chain came up with better-than-expected results in the last reported quarter on higher-than-anticipated sales from the company’s wholesale vehicles segment. CarMax surpassed earnings estimates in each of the trailing four quarters, with the average being 146.9%. This is depicted in the graph below:

CarMax, Inc. Price and EPS Surprise

CarMax, Inc. Price and EPS Surprise

CarMax, Inc. price-eps-surprise | CarMax, Inc. Quote

Trend in Estimate Revisions

The Zacks Consensus Estimate for fiscal first-quarter earnings per share has moved a penny north in the past seven days. The metric indicates a significant improvement from the year-ago quarter’s earnings of 23 cents per share. Moreover, the Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 91.8%.

Things to Note

Amid the economic recovery from the pandemic lows buoyed by the widespread vaccination drive and fiscal stimulus, demand for vehicles has been on the rise, which is likely to have aided sales of CarMax. The company, which focuses more on the used car market, is expected to have reaped benefits from higher year-over-year unit sales and average selling price (ASP) of used vehicles.

The Zacks Consensus Estimate for used vehicles sold is pegged at 243,050 units, calling for massive year-over-year growth of 80%. The consensus estimate for ASP is pegged at $20,550, indicating an increase from the year-ago figure of $20,346. Consequently, the Zacks Consensus Estimate for used vehicle net sales is pinned at $5,150 million, suggesting a notable rise from the year-ago quarter’s $2,786.2 million. The Zacks Consensus Estimate for wholesale vehicle revenues is pegged at $692 million, implying a year-over-year surge of 1,017% on the back of higher unit sales and ASP. 

The company’s omni-channel offerings — that provide a personalized multichannel experience — have been improving the shopping experience of buyers and are likely to have driven the top line during the quarter to be reported.

Earnings Whispers

Our proven model predicts an earnings beat for CarMax this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, which is the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CarMax — whose peers include Advance Auto Parts (AAP - Free Report) , O’Reilly Automotive (ORLY - Free Report) and AutoZone (AZO - Free Report) — currently has a Zacks Rank #3 and an Earnings ESP of +6.21%. This is because the Most Accurate Estimate is pegged 10 cents higher than the Zacks Consensus Estimate. You can see the complete list of today’s Zacks #1 Rank stocks here.

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