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CarMax (KMX) Gears Up for Q2 Earnings: What's in the Cards?

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CarMax Inc. (KMX - Free Report) is slated to release second-quarter fiscal 2022 results on Sep 30, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings is pegged at $1.90 per share on revenues of $6.95 billion.

The used car dealership chain delivered better-than-expected results in the last reported quarter on higher-than-anticipated revenues from the used and wholesale vehicle segments.

Over the trailing four quarters, CarMax surpassed estimates on all occasions, the average surprise being 41.87%. 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 Revision   

The Zacks Consensus Estimate for CarMax’s fiscal second-quarter earnings per share has been revised upward by 4 cents in the past seven days. Moreover, it compares favorably with the year-ago quarter’s earnings of $1.79 per share. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 29.39%.

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. This has been elaborated below.

Earnings ESP: CarMax has an Earnings ESP of +1.41%. This is because the Most Accurate Estimate is pegged 3 cents higher than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: CarMax, peers of which include Advance Auto Parts (AAP - Free Report) , O’Reilly Automotive (ORLY - Free Report) and AutoZone (AZO - Free Report) , currently carries a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Factors to Note

CarMax, which focuses more on the used vehicle market, is likely to have benefited from higher year-over-year sales and average selling price (ASP) of used vehicles. This is anticipated to have buoyed the company’s top line during the to-be-reported quarter. For the August-end quarter, the consensus estimate for ASP is pegged at $25,590, indicating an increase from the year-ago figure of $19,990. The Zacks Consensus Estimate for used-vehicles net sales, which have the highest contribution to its revenues, is pinned at $5,569 million, suggesting a rise from the $4,389 million recorded in the prior-year quarter. The Zacks Consensus Estimate for the quarterly gross profit from the used-vehicle segment is pegged at $516 million, calling for a rise from the $481 million reported in the year-earlier quarter.

The firm’s consistent efforts to modernize its wholesale auction platforms are likely to have aided the company during the quarter under review. The Zacks Consensus Estimate for the quarterly net sales of wholesale vehicles is pegged at $1,077 million, indicating an increase from the prior-year period’s $819 million. The Zacks Consensus Estimate for the quarterly gross profit from the wholesale vehicle segment is pegged at $175 million, suggesting a surge from the $144 million reported in the prior-year quarter. The consensus mark for revenues from other segments stands at $180 million, calling for a rise from the $164 million recorded in second-quarter fiscal 2021.

CarMax’s omni-channel efforts to optimize customer shopping experience are likely to have supported the top line during the to-be-reported quarter.