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Why Is CarMax (KMX) Up 3% Since the Last Earnings Report?
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It has been about a month since the last earnings report for CarMax Inc. (KMX - Free Report) . Shares have added nearly 3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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 Q4 Earnings Rise 14.1% Y/Y, Tops Estimates
CarMax posted earnings per share of $0.81 in the fourth quarter of fiscal 2017 (ended Feb 28, 2017), highlighting an increase of 14.1% from $0.71 earned a year ago. Earnings surpassed the Zacks Consensus Estimate of $0.79 as well.
Net sales and operating revenues in the reported quarter rose 9.3% year over year to $4.05 billion. Moreover, the figure also surpassed the Zacks Consensus Estimate of $3.97 billion.
Used vehicle revenues appreciated 11.7% to $3.45 billion in the reported quarter, driven by higher unit sales, which increased 13.4% to 176,017 vehicles. Comparable-store used vehicle unit sales inched up 8.7% in the quarter on improved conversion and increase in store traffic.
Wholesale vehicle revenues dropped 7.9% to $465.9 million in the quarter. Unit sales fell 1.2% to 91,143 vehicles. Average selling price of wholesale vehicles went down 6.8% to $4,910.
Other sales and revenues increased 19.2% to $133.8 million. Its extended protection plan (EPP) revenues grew 19.3% to $84 million.
Gross profit improved 14.9% to $562.2 million from $489.3 million in the year-ago quarter.
Full Year Fiscal 2017
For full-year fiscal 2017, CarMax posted earnings per share of $3.26, an increase of 7.6% from $3.03 earned a year ago. However, earnings missed the Zacks Consensus Estimate of $3.28.
Net sales and operating revenues in the reported quarter rose 4.8% year over year to $15.88 billion. Moreover, the figure surpassed the Zacks Consensus Estimate of $15.83 billion.
CarMax Auto Finance (CAF)
CAF reported a 10.2% decrease in income to $82.9 million in fourth-quarter fiscal 2017 from $92.3 million a year ago. This resulted from an increase in the provision for loan losses as well as an update to determine the loan loss allowance.
Store Openings
During the fourth quarter of fiscal 2017, CarMax opened four stores. Two of them were opened in new markets (one in Mobile, AL, and the other in Albany, NY) and the other two were opened in the existing markets (both in Los Angeles, CA). In fiscal 2017, the company opened 15 stores.
The company plans to open another 15 stores in fiscal 2018, It also intends plans to open 13–16 superstores in fiscal 2019.
Share Repurchase Program
During the quarter under review, CarMax spent $101.1 million to repurchase 1.5 million shares under its existing share buyback program. In the full fiscal year, the company purchased 10.3 million shares for $557.7 million. As of Feb 28, 2017, the company had $1.59 billion of authorization remaining under its share repurchase program.
Financial Position
CarMax had cash and cash equivalents of $38.4 million as of Feb 28, 2017, up from $37.4 million as of Feb 29, 2016. Long term debt rose to $952.6 million as of Feb 28, 2017, from $713.9 million as of Feb 29, 2016.
In fiscal 2017, CarMax had a cash outflow of $468.1 million from operations, compared with $148.9 million in the prior-year period. Capital expenditures totaled $418.1 million in fiscal 2017, up from $315.6 million a year ago. Meanwhile, the company projects capital expenditures of around $325 million for fiscal 2018.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two upward revisions for the current quarter compared to two downward.
At this time, CarMax's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.
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Why Is CarMax (KMX) Up 3% Since the Last Earnings Report?
It has been about a month since the last earnings report for CarMax Inc. (KMX - Free Report) . Shares have added nearly 3% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock’s next earnings release, or is it 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 Q4 Earnings Rise 14.1% Y/Y, Tops Estimates
CarMax posted earnings per share of $0.81 in the fourth quarter of fiscal 2017 (ended Feb 28, 2017), highlighting an increase of 14.1% from $0.71 earned a year ago. Earnings surpassed the Zacks Consensus Estimate of $0.79 as well.
Net sales and operating revenues in the reported quarter rose 9.3% year over year to $4.05 billion. Moreover, the figure also surpassed the Zacks Consensus Estimate of $3.97 billion.
Used vehicle revenues appreciated 11.7% to $3.45 billion in the reported quarter, driven by higher unit sales, which increased 13.4% to 176,017 vehicles. Comparable-store used vehicle unit sales inched up 8.7% in the quarter on improved conversion and increase in store traffic.
Wholesale vehicle revenues dropped 7.9% to $465.9 million in the quarter. Unit sales fell 1.2% to 91,143 vehicles. Average selling price of wholesale vehicles went down 6.8% to $4,910.
Other sales and revenues increased 19.2% to $133.8 million. Its extended protection plan (EPP) revenues grew 19.3% to $84 million.
Gross profit improved 14.9% to $562.2 million from $489.3 million in the year-ago quarter.
Full Year Fiscal 2017
For full-year fiscal 2017, CarMax posted earnings per share of $3.26, an increase of 7.6% from $3.03 earned a year ago. However, earnings missed the Zacks Consensus Estimate of $3.28.
Net sales and operating revenues in the reported quarter rose 4.8% year over year to $15.88 billion. Moreover, the figure surpassed the Zacks Consensus Estimate of $15.83 billion.
CarMax Auto Finance (CAF)
CAF reported a 10.2% decrease in income to $82.9 million in fourth-quarter fiscal 2017 from $92.3 million a year ago. This resulted from an increase in the provision for loan losses as well as an update to determine the loan loss allowance.
Store Openings
During the fourth quarter of fiscal 2017, CarMax opened four stores. Two of them were opened in new markets (one in Mobile, AL, and the other in Albany, NY) and the other two were opened in the existing markets (both in Los Angeles, CA). In fiscal 2017, the company opened 15 stores.
The company plans to open another 15 stores in fiscal 2018, It also intends plans to open 13–16 superstores in fiscal 2019.
Share Repurchase Program
During the quarter under review, CarMax spent $101.1 million to repurchase 1.5 million shares under its existing share buyback program. In the full fiscal year, the company purchased 10.3 million shares for $557.7 million. As of Feb 28, 2017, the company had $1.59 billion of authorization remaining under its share repurchase program.
Financial Position
CarMax had cash and cash equivalents of $38.4 million as of Feb 28, 2017, up from $37.4 million as of Feb 29, 2016. Long term debt rose to $952.6 million as of Feb 28, 2017, from $713.9 million as of Feb 29, 2016.
In fiscal 2017, CarMax had a cash outflow of $468.1 million from operations, compared with $148.9 million in the prior-year period. Capital expenditures totaled $418.1 million in fiscal 2017, up from $315.6 million a year ago. Meanwhile, the company projects capital expenditures of around $325 million for fiscal 2018.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates flatlined during the past month. There have been two upward revisions for the current quarter compared to two downward.
CarMax Inc Price and Consensus
CarMax Inc Price and Consensus | CarMax Inc Quote
VGM Scores
At this time, CarMax's stock has a nice Growth Score of 'B', though it is lagging a lot on the momentum front with an 'F'. However, the stock was allocated a grade of 'C' on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'C'. If you aren't focused on one strategy, this score is the one you should be interested in.
Our style scores indicate that the stock is more suitable for growth investors than value investors.
Outlook
The stock has a Zacks Rank #4 (Sell). We are expecting a below average return from the stock in the next few months.