We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CarMax Gains from Focus on Used-Car Market & New Stores
Read MoreHide Full Article
On Jul 8, we issued an updated research report on CarMax Inc. (KMX - Free Report) . The company’s focus on the used-vehicle market, aggressive store expansion strategy and share repurchase activity should help it outperform peers. However, high competition, declining other sales and revenues, along with its weak financial position pose concerns.
CarMax posted earnings per share of 90 cents in the first quarter of fiscal 2017 (ended May 31, 2016), highlighting an increase of 4.7% from 86 cents earned a year ago. However, earnings missed the Zacks Consensus Estimate of 92 cents.
Net sales and operating revenues in the reported quarter rose 2.8% year over year to $4.13 billion. However, the figure lagged the Zacks Consensus Estimate of $4.22 billion.
Unlike its peers, CarMax focuses more on the used-car market, which helps it to outperform the industry. The company is among the strongest operators in its peer group.
CarMax also follows an aggressive store growth initiative to expand its business. During the first quarter of fiscal 2017, the company opened two stores in new markets. As of May 31, 2016, it had 161 used-car stores across 81 markets. Subsequent to the end of the quarter, it opened a store in the El Paso, TX market. In fiscal 2017, CarMax plans to open 15 stores. It also intends to open 13–16 superstores in fiscal 2018.
In addition, CarMax consistently enhances shareholder value through buybacks. During the first quarter of fiscal 2017, the company spent $132 million to repurchase 2.6 million shares under its existing share buyback program. As of May 31, 2016, it had $1.27 billion of authorization remaining under its share repurchase program.
However, CarMax’s financial position and other sales and revenues have been deteriorating. This will adversely affect the performance of the company. Further, the used-car market in the U.S. is highly fragmented and competitive, with the presence of several dealers, alongside private individuals, who are also engaged in the business. Additionally, the rising popularity of the Internet for marketing and trading vehicles can unfavorably impact CarMax’s financials.
CarMax currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Some better-ranked automobile stocks include Commercial Vehicle Group Inc. (CVGI - Free Report) , Spartan Motors Inc. and Unique Fabricating, Inc. , all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
CarMax Gains from Focus on Used-Car Market & New Stores
On Jul 8, we issued an updated research report on CarMax Inc. (KMX - Free Report) . The company’s focus on the used-vehicle market, aggressive store expansion strategy and share repurchase activity should help it outperform peers. However, high competition, declining other sales and revenues, along with its weak financial position pose concerns.
CarMax posted earnings per share of 90 cents in the first quarter of fiscal 2017 (ended May 31, 2016), highlighting an increase of 4.7% from 86 cents earned a year ago. However, earnings missed the Zacks Consensus Estimate of 92 cents.
Net sales and operating revenues in the reported quarter rose 2.8% year over year to $4.13 billion. However, the figure lagged the Zacks Consensus Estimate of $4.22 billion.
Unlike its peers, CarMax focuses more on the used-car market, which helps it to outperform the industry. The company is among the strongest operators in its peer group.
CarMax also follows an aggressive store growth initiative to expand its business. During the first quarter of fiscal 2017, the company opened two stores in new markets. As of May 31, 2016, it had 161 used-car stores across 81 markets. Subsequent to the end of the quarter, it opened a store in the El Paso, TX market. In fiscal 2017, CarMax plans to open 15 stores. It also intends to open 13–16 superstores in fiscal 2018.
In addition, CarMax consistently enhances shareholder value through buybacks. During the first quarter of fiscal 2017, the company spent $132 million to repurchase 2.6 million shares under its existing share buyback program. As of May 31, 2016, it had $1.27 billion of authorization remaining under its share repurchase program.
However, CarMax’s financial position and other sales and revenues have been deteriorating. This will adversely affect the performance of the company. Further, the used-car market in the U.S. is highly fragmented and competitive, with the presence of several dealers, alongside private individuals, who are also engaged in the business. Additionally, the rising popularity of the Internet for marketing and trading vehicles can unfavorably impact CarMax’s financials.
CarMax currently carries a Zacks Rank #3 (Hold).
Stocks that Warrant a Look
Some better-ranked automobile stocks include Commercial Vehicle Group Inc. (CVGI - Free Report) , Spartan Motors Inc. and Unique Fabricating, Inc. , all sporting a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>