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CarMax (KMX) Q3 Earnings Miss on Lower-Than-Expected Sales

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CarMax Inc. (KMX - Free Report) reported third-quarter fiscal 2023 (ended Nov 30, 2022) net earnings per share of 24 cents, lagging the Zacks Consensus Estimate of 58 cents amid lower-than-anticipated revenues across all segments. The bottom line also fell from $1.53 per share recorded in the year-ago period. The auto retailer registered revenues of $6,506 million for the November-end quarter, which fell short of the Zacks Consensus Estimate of $7,128 million. The top line also contracted 23.7% year over year.

Segmental Performance

CarMax’s used-vehicle net sales totaled $5,204.6 million for the reported quarter, down 19.1% year over year, owing to a decline in units sold. The metric also missed the consensus mark of $5,963 million. While the units sold in this segment tailed off 20.8% year over year to 180,050 vehicles, the average selling price of used vehicles inched up 1.9% from the year-ago quarter to $28,530. Comparable store used-vehicle units declined 22.4%, while revenues fell 21% from the prior-year level. Used-vehicle gross profit per unit (GPU) came in at $2,237, slightly higher than the prior-year quarter’s $2,235, topping the consensus mark of $1,984.

For the fiscal third quarter, wholesale vehicle revenues tanked 40.1% from the year-ago level to $1,152.2 million. The reported figure was below the Zacks Consensus Estimate of $1,690 million. Units sold declined 36.7% to 118,757 units, while ASP dipped 6% to $9,294. Wholesale vehicle GPU came in at $966, down from the year-ago period’s $1,131 but topping the consensus mark of $953 million.

Other sales and revenues contracted 12.2% year over year to $149 million for the fiscal third quarter and missed the consensus mark of $173 million. CarMax Auto Finance witnessed an 8.3% year-over-year decline in income to $152.2 million in the November-end quarter.

Other Tidbits

Selling, general and administrative expenses were up 2.7% from the prior-year quarter to $591.7 million. The firm had cash/cash equivalents and long-term debt of $688.6 million and $1,937.1 million, respectively, as of Nov 30, 2022. CarMax now envisions fiscal 2023 capex to be around $450 million, lower than $500 million estimated earlier.

During the fiscal third quarter, CarMax bought back 30,000 shares of common stock for $2.6 million under the share repurchase program. As of Nov 30, 2022, it had $2.45 billion remaining under the share repurchase authorization.

The company opened one new store in Oceanside, CA during the fiscal third quarter. KMX —carrying a Zacks Rank #3 (Hold) — currently operates more than 230 used car stores. In fiscal 2023 and 2024, CarMax targets to open 10 and 5 stores, respectively.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Releases

CarMax’s key peers include Advance Auto Parts (AAP - Free Report) , O’Reilly Automotive (ORLY - Free Report) and AutoZone (AZO - Free Report) .

Advance Auto released third-quarter 2022 results on Nov 15.  The company’s adjusted earnings of $2.84 per share were down 11.5% from the year-ago quarter’s figure and missed the Zacks Consensus Estimate of $3.32 per share. AAP’s revenues of $2,641.3 million fell short of the Zacks Consensus Estimate of $2,652 million and inched down 0.8% from the year-ago reported figure. Advance Auto estimates 2022 net sales in the band of $11-$11.2 billion. The company targets an FCF of a minimum of $300 million. Adjusted EPS is forecast between $12.60 and $12.80. The auto parts retailer now intends to buy back a maximum of $600 million worth of shares in 2022. It aims to open 125-150 new stores this year.

O’Reilly posted third-quarter 2022 results on Oct 26. Adjusted earnings of $9.17 per share surpassed the Zacks Consensus Estimate of $8.46. The bottom line increased 13.6% from $8.07 per share in the prior-year quarter.  ORLY registered quarterly revenues of $3,799.6 million, crossing the Zacks Consensus Estimate of $3,713 million. The top line was 9% higher than the prior-year figure of $3,479.5 million. The company expects 2022 revenues in the range of $14.1-$14.3 billion. Earnings per share are expected in the range of $32.35-$32.85. Free cash flow is projected in the band of $1.8-$2.1 billion.

AutoZonereported first-quarter fiscal 2023 results on Dec 6. It posted earnings of $27.45 per share, up 6.8% from the prior-year figure of $25.69. The bottom line surpassed the Zacks Consensus Estimate of $25.15 per share on higher-than-expected comps growth. The net sales also grew 8.6% to $3,985.1 million. The top line beat the Zacks Consensus Estimate of $3,836 million.During the quarter ended Nov 19, AutoZone opened 28 new stores in the United States, three in Mexico and four in Brazil. It exited the quarter with 6,196 stores in the United States, 706 in Mexico and 76 in Brazil. The total store count was 6,978 as of Nov 19.At quarter-end, it had nearly $2.7 billion remaining under its current share repurchase authorization.

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