CarMax Inc (NYSE: KMX) opened about 10% up this morning after reporting profit for its fourth financial quarter that topped Street expectations by a massive margin.
CarMax shares up on robust margins
The Richmond-headquartered firm recorded a 21.1% decline in used vehicles sales and 41.6% in wholesale vehicles sales. Still, CEO Bill Nash said in the earnings press release:
We are confident that we are well positioned to continue leading the used car industry and to accelerate growth when the market improves.
On the plus side, retail gross profit per used vehicles climbed 3.7% in the recently concluded quarter to $2,277. Versus their recent low, CarMax shares are now up nearly 30%.
Notable figures in CarMax Q4 earnings report
Net income printed at $69 million versus the year ago $160 million
Per-share earnings also tanked from 98 cents to 44 cents
Revenue slipped 25.6% on a year-over-year basis to $5.72 billion
FactSet consensus was 20 cents EPS on $6.11 billion in revenue
Comparable sales dropped 14.1% – worse than expected
Income from CarMax Auto Finance (CAF) also decline 36.1% in Q4. According to the company’s earnings press release:
Vehicle affordability challenges continued to impact our Q4 unit sales performance, as headwinds remained due to widespread inflation, climbing interest rates, tightening lending standards and prolonged low consumer confidence.
For potential investors, it should also be of interest to know that the Wall Street currently has a consensus “hold” rating on CarMax stock with a meaningful downside to $58 a share on average.
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