It has been about a month since the last earnings report for CarMax (KMX Quick QuoteKMX - Free Report) . Shares have added about 7% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is CarMax due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

CarMax Beats Q4 Earnings Estimates

CarMax reported fourth-quarter fiscal 2023 (ended Feb 28, 2023) net earnings per share of 44 cents, topping the Zacks Consensus Estimate of 22 cents due to higher-than-anticipated gross profit per unit in the used and wholesale vehicle segments. But the bottom line fell from 98 cents per share recorded in the year-ago period. The auto retailer registered revenues of $5,722.5 million for the February-end quarter, which fell short of the Zacks Consensus Estimate of $5,829 million. The top line also contracted by 25.6% year over year.

Segmental Performance

CarMax’s used-vehicle net sales totaled $4,531.1 million for the reported quarter, down 21.1% year over year, owing to a decline in units sold. The metric also missed the consensus mark of $4,738 million. While the units sold in this segment tailed off 12.6% year over year to 169,884 vehicles, the average selling price of used vehicles fell 9.3% from the year-ago quarter to $26,598. Comparable store used-vehicle units declined 14.1%, while revenues fell 22% from the prior-year level. Used-vehicle gross profit per unit (GPU) came in at $2,277, slightly higher than the prior-year quarter’s $2,195, topping the consensus mark of $2,136.

For the fiscal fourth quarter, wholesale vehicle revenues tanked 41.6% from the year-ago level to $1,030.7 million. The reported figure was above the Zacks Consensus Estimate of $1,006 million. Units sold declined 19.3% to 120,330 while ASP dipped 27.8% to $8,297. Wholesale vehicle GPU came in at $1,187, down from the year-ago period’s $1,191 but topping the consensus mark of $928.

Other sales and revenues contracted 11.4% year over year to $160.6 million for the fiscal fourth quarter, missing the consensus mark of $168 million. CarMax Auto Finance witnessed a 36.1% year-over-year decline in income to $123.9 million in the February-end quarter.

Other Tidbits

Selling, general and administrative expenses fell 7.7% from the prior-year quarter to $572.8 million. The firm had cash/cash equivalents and long-term debt of $314.8 million and $1,909.3 million, respectively, as of Feb 28, 2023. CarMax envisions fiscal 2024 capex at around $450 million.

During the fiscal fourth quarter, CarMax did not buy back shares of common stock under the share repurchase program. As of Feb 28, 2023, it had $2.45 billion remaining under the share repurchase authorization.

The company opened five new stores in the fiscal fourth quarter. KMX currently operates more than 240 used car stores. In fiscal 2024, it targets to open 5 stores.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

The consensus estimate has shifted -16.09% due to these changes.

VGM Scores

At this time, CarMax has a poor Growth Score of F, a grade with the same score on the momentum front. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, CarMax has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.