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CarMax Gains From Robust Used-Car Market, Store Expansion

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We issued an updated research report on CarMax, Inc. (KMX - Free Report) on Jul 10.

The company focuses on the used-car market, enabling it to outperform its peers in the industry. During first-quarter fiscal 2019, CarMax’s used-vehicle sales increased 1.6%, primarily due to robust used-vehicle market and improved economy. Also, the company’s low prices and customer-friendly sales process add to its competitive advantage in used-vehicle retailing.

Increased sales enabled CarMax to witness a year-over-year increase in revenues and adjusted earnings in the first quarter of fiscal 2019. Moreover, both adjusted earnings per share and revenues surpassed the respective Zacks Consensus Estimate.

CarMax, Inc. Price and Consensus

Moreover, this Richmond, VA-based retailer of used vehicles is focusing on expansion by opening stores in new as well as existing markets. This will aid CarMax to reach more customers and drive revenue growth. During first-quarter fiscal 2019, it opened three stores, out of which, one was at its new market i.e. Greenville, NC. Moreover, in second-quarter fiscal 2019, it plans to open three other stores at Santa Fe; Macon, GA; and Oklahoma City. Further, CarMax plans to enter 10 new television markets and expand presence in five existing ones within 12 months, starting from May 31, 2018.

Over the past month, the company’s stock has seen the Zacks Consensus Estimate for quarterly and annual earnings being revised 3.5% and 3% upward, respectively.

Price Performance

In the past six months, CarMax’s stock has gained 5.9%, outperforming 3.4% increase recorded by the industry it belongs to.

Zacks Rank & Other Stocks to Consider

Currently, CarMax has a Zacks Rank #2 (Buy). A few other top-ranked stocks in the auto space are Visteon Corporation (VC - Free Report) , Magna International Inc. (MGA - Free Report) and Fox Factory Holding Corporation (FOXF - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Visteon has an expected long-term growth rate of 15%. Shares of the company have gained 30.3% over the past year.

Magna International has an expected long-term growth rate of 8.5%. Shares of the company have risen 27.5% over the past year.

Fox Factory has an expected long-term growth rate of 12.5%. Shares of the company have jumped 45.7% over the past year.

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