Latest news with #Carmax
Yahoo
23-04-2025
- Automotive
- Yahoo
KMX Q1 Earnings: CarMax Matches Revenue Expectations, Misses Profit Targets Amid Shifting Market Dynamics
Used automotive vehicle retailer Carmax (NYSE:KMX) met Wall Street's revenue expectations in Q1 CY2025, with sales up 6.7% year on year to $6 billion. Its non-GAAP profit of $0.60 per share was 8.6% below analysts' consensus estimates. Is now the time to buy KMX? Revenue: $6 billion vs analyst estimates of $5.99 billion (6.7% year-on-year growth, in line) Adjusted EPS: $0.60 vs analyst expectations of $0.66 (8.6% miss) Adjusted EBITDA: $234.2 million vs analyst estimates of $228.7 million (3.9% margin, 2.4% beat) Operating Margin: 2.5%, in line with the same quarter last year Free Cash Flow Margin: 0.3%, down from 3.6% in the same quarter last year Locations: 250 at quarter end, up from 245 in the same quarter last year Same-Store Sales rose 5.9% year on year (-2% in the same quarter last year) Market Capitalization: $9.93 billion CarMax's first quarter results reflected steady growth in unit sales and improved operational efficiency, driven by investments in technology and a broader product mix. Management attributed the year-on-year sales increase to enhanced digital capabilities, a more efficient sourcing process from both consumers and dealers, and ongoing cost savings across logistics and reconditioning operations. CEO Bill Nash cited the company's ability to offer a seamless online and in-store experience as a key differentiator in the highly competitive used car market. Looking forward, CarMax's leadership emphasized the potential impact of new tariffs and rising parts costs, which could influence both demand and profitability. They highlighted ongoing efforts to mitigate these risks through cost control and expanded financing offerings, while also noting that macroeconomic uncertainty and shifting consumer preferences continue to shape the company's outlook. Management was cautious in its forward guidance, focusing on sustaining recent momentum and adapting to changing market conditions. CarMax's management provided a comprehensive update on the factors driving the quarter's performance and the company's evolving strategy. They highlighted improvements in unit volumes, digital engagement, and operational efficiencies, while also addressing near-term challenges around profitability and external cost pressures. The discussion underscored CarMax's commitment to balancing growth initiatives with prudent cost management in a volatile economic environment. Digital Sales Integration: CarMax saw a growing proportion of retail transactions supported by digital tools, with 67% of sales classified as 'omni-channel' under the updated definition. Management expects continued growth in digitally assisted sales as online tools and customer adoption improve. Supply Chain and Sourcing: The company achieved record vehicle sourcing from both consumers and dealers, driven by enhancements to its online appraisal platform and dealer-facing solutions. These initiatives are designed to broaden inventory and better meet shifting consumer demand. Financing Model Expansion: CarMax Auto Finance (CAF) expanded its lending across more segments of the credit spectrum. By retaining a greater share of profitable loan originations previously allocated to third parties, management expects to increase CAF's penetration and drive long-term income growth, despite higher near-term provisions for loan losses. Operational Efficiency Gains: The company reported meaningful cost savings in logistics and reconditioning, exceeding initial targets with $125 per unit in annual efficiency improvements. These savings are expected to help offset rising parts costs and support affordability for customers. Market Share and Product Mix: CarMax experienced notable growth in sales of late-model (zero to four-year-old) vehicles, while maintaining its presence in the six- to ten-year-old segment. Management emphasized a flexible approach to inventory mix, based on evolving consumer preferences and market dynamics. Management's outlook for the coming quarters is shaped by ongoing investments in digital capabilities, efficiency initiatives, and expanded financing options, all set against a backdrop of macroeconomic uncertainty and possible cost inflation. No explicit revenue or profit guidance was provided for the next quarter or the full year. Tariffs and Cost Pressures: New tariffs on automotive imports and rising parts prices could increase costs for both new and used vehicles. Management plans to mitigate these impacts through ongoing efficiency gains and pricing strategies, but acknowledged uncertainty around the ultimate effect on demand and margins. Financing Penetration: CarMax's strategy to broaden its credit spectrum and recapture more loan originations is expected to drive future income growth in CarMax Auto Finance, albeit with temporarily higher provisions for loan losses as the mix shifts. Digital Experience Enhancements: Continued investment in online tools and customer-facing technology is aimed at increasing conversion rates, improving the shopping experience, and supporting sales growth, especially as consumer preferences evolve toward more digital interactions. Sharon Zackfia (William Blair): Asked about the drivers behind the company's market share recovery and lessons learned from earlier periods of share loss; management cited improved execution, expanded sourcing, and adaptability to changing consumer preferences. Seth Basham (Wedbush Securities): Inquired about the impact of new car tariffs on used vehicle demand and CarMax's share gains; CEO Bill Nash explained that higher new car prices could drive more consumers to the used market, especially for late-model vehicles. John Murphy (Bank of America): Questioned the sustainability of operational cost savings and the company's ability to maintain margins amid changing reconditioning and supply chain dynamics; management highlighted ongoing efficiency efforts and the benefits of additional reconditioning capacity. Rajat Gupta (JPMorgan): Sought details on how CarMax is managing inventory acquisition amid tariff uncertainty and auction market volatility; management emphasized long-standing expertise in inventory management and reliance on data-driven sourcing. Chris Bottiglieri (BNP Paribas): Asked if CarMax has remaining cost levers to pull in the event of an economic downturn; CFO Enrique Mayor-Mora responded that further efficiency improvements are planned and the company retains the ability to adjust costs as needed. In upcoming quarters, our analysts will watch (1) the company's ability to manage cost inflation and pass along efficiency gains to offset tariff-related headwinds, (2) the pace of growth in digitally supported and omni-channel sales as technology initiatives mature, and (3) continued expansion of CarMax Auto Finance's penetration across the credit spectrum. Execution on these fronts, along with adaptability to macroeconomic and industry shifts, will be critical indicators of CarMax's ability to sustain growth and profitability. Could KMX achieve its goals and exceed our expectations? See for yourself in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 9 Market-Beating Stocks. This is a curated list of our High Quality stocks that have generated a market-beating return of 175% over the last five years. Stocks that made our list in 2019 include now familiar names such as Nvidia (+2,183% between December 2019 and December 2024) as well as under-the-radar businesses like Comfort Systems (+751% five-year return). Find your next big winner with StockStory today.
Yahoo
19-04-2025
- Automotive
- Yahoo
Giverny Capital Asset Management Sold Carmax (KMX) Amid Difficult Competitive Environment
Giverny Capital Asset Management, LLC, an investment management company, recently published its first-quarter 2025 investor letter. A copy of the letter can be downloaded here. The portfolio returned -3.39% in the quarter, compared to a -4.27% return for the S&P 500 Total Return Index. For the year ended March 31, 2025, the fund returned 1.75% compared to an 8.25% return for the Index during the same period. For more information on the fund's best picks in 2025, please check its top five holdings. In its first quarter 2025 investor letter, Giverny Capital Asset Management highlighted stocks such as CarMax, Inc. (NYSE:KMX). CarMax, Inc. (NYSE:KMX) is a used vehicle retailer headquartered in Richmond, Virginia. The one-month return of CarMax, Inc. (NYSE:KMX) was -9.90%, and its shares lost 4.89% of their value over the last 52 weeks. On April 17, 2025, CarMax, Inc. (NYSE:KMX) stock closed at $64.59 per share with a market capitalization of $9.862 billion. Giverny Capital Asset Management stated the following regarding CarMax, Inc. (NYSE:KMX) in its Q1 2025 investor letter: "We trimmed CarMax, Inc. (NYSE:KMX) during the quarter – it has been a rough few years for the used car retailer. I believe the customer friendly business model remains attractive, but a lot of Wall Street capital has flowed to Carvana, creating a more difficult competitive environment. In early April, Carmax reported encouraging operating results. Yet despite heavy investment in online selling capabilities, Carmax is not gaining market share. We adjusted the position size to acknowledge that fact." A happy customer inspecting a newly purchased used car with the help of a sales assistant. CarMax, Inc. (NYSE:KMX) is not on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 57 hedge fund portfolios held CarMax, Inc. (NYSE:KMX) at the end of the fourth quarter compared to 44 in the third quarter. In the fourth quarter of financial year 2025, CarMax, Inc. (NYSE:KMX) reported total sales of $6 billion, up 7% from prior year's quarter. While we acknowledge the potential of CarMax, Inc. (NYSE:KMX) as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock. We covered CarMax, Inc. (NYSE:KMX) in another article, where we shared top stock picks from Diamond Hill Capital. In addition, please check out our hedge fund investor letters Q1 2025 page for more investor letters from hedge funds and other leading investors. READ NEXT: Michael Burry Is Selling These Stocks and A New Dawn Is Coming to US Stocks. Disclosure: None. This article is originally published at Insider Monkey.
Yahoo
10-04-2025
- Automotive
- Yahoo
CarMax's (NYSE:KMX) Q1 Earnings Results: Revenue In Line With Expectations But Stock Drops
Used automotive vehicle retailer Carmax (NYSE:KMX) met Wall Street's revenue expectations in Q1 CY2025, with sales up 6.7% year on year to $6.00 billion. Its GAAP profit of $0.58 per share was 11.9% below analysts' consensus estimates. Is now the time to buy CarMax? Find out in our full research report. Revenue: $6.00 billion vs analyst estimates of $5.99 billion (6.7% year-on-year growth, in line) EPS (GAAP): $0.58 vs analyst expectations of $0.66 (11.9% miss) Adjusted EBITDA: $150 million vs analyst estimates of $228.7 million (2.5% margin, 34.4% miss) Operating Margin: 1%, in line with the same quarter last year Free Cash Flow Margin: 0.3%, down from 3.6% in the same quarter last year Locations: 250 at quarter end, up from 245 in the same quarter last year Same-Store Sales rose 5.9% year on year (-2% in the same quarter last year) Market Capitalization: $12.31 billion 'We are pleased with the continuing momentum across our diversified business during the fourth quarter. We delivered robust EPS growth driven by increases in unit sales and buys, strong growth in total gross profit, an increase in CAF income, and ongoing management of SG&A,' said Bill Nash, president and chief executive officer. Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States. Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need. Reviewing a company's long-term sales performance reveals insights into its quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul. With $26.35 billion in revenue over the past 12 months, CarMax is one of the larger companies in the consumer retail industry and benefits from a well-known brand that influences purchasing decisions. However, its scale is a double-edged sword because there are only a finite number of places to build new stores, making it harder to find incremental growth. To expand meaningfully, CarMax likely needs to tweak its prices or enter new markets. As you can see below, CarMax's sales grew at a tepid 6.4% compounded annual growth rate over the last six years (we compare to 2019 to normalize for COVID-19 impacts). This quarter, CarMax grew its revenue by 6.7% year on year, and its $6.00 billion of revenue was in line with Wall Street's estimates. Looking ahead, sell-side analysts expect revenue to grow 4.9% over the next 12 months, a slight deceleration versus the last six years. We still think its growth trajectory is attractive given its scale and suggests the market is baking in success for its products. Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link. CarMax sported 250 locations in the latest quarter. Over the last two years, it has opened new stores quickly, averaging 2.9% annual growth. This was faster than the broader consumer retail sector. When a retailer opens new stores, it usually means it's investing for growth because demand is greater than supply, especially in areas where consumers may not have a store within reasonable driving distance. The change in a company's store base only tells one side of the story. The other is the performance of its existing locations and e-commerce sales, which informs management teams whether they should expand or downsize their physical footprints. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket). CarMax's demand has been shrinking over the last two years as its same-store sales have averaged 4.9% annual declines. This performance is concerning - it shows CarMax artificially boosts its revenue by building new stores. We'd like to see a company's same-store sales rise before it takes on the costly, capital-intensive endeavor of expanding its store base. In the latest quarter, CarMax's same-store sales rose 5.9% year on year. This growth was a well-appreciated turnaround from its historical levels, showing the business is regaining momentum. We struggled to find many positives in these results. Its EBITDA missed significantly and its EPS fell short of Wall Street's estimates. Overall, this quarter could have been better. The stock traded down 7.1% to $74.45 immediately following the results. The latest quarter from CarMax's wasn't that good. One earnings report doesn't define a company's quality, though, so let's explore whether the stock is a buy at the current price. The latest quarter does matter, but not nearly as much as longer-term fundamentals and valuation, when deciding if the stock is a buy. We cover that in our actionable full research report which you can read here, it's free. 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Yahoo
09-04-2025
- Automotive
- Yahoo
CarMax (KMX) Q1 Earnings Report Preview: What To Look For
Used automotive vehicle retailer Carmax (NYSE:KMX) will be reporting results tomorrow before market hours. Here's what to expect. CarMax beat analysts' revenue expectations by 3% last quarter, reporting revenues of $6.22 billion, up 1.2% year on year. It was a stunning quarter for the company, with an impressive beat of analysts' EPS estimates and a solid beat of analysts' EBITDA estimates. Is CarMax a buy or sell going into earnings? Read our full analysis here, it's free. This quarter, analysts are expecting CarMax's revenue to grow 6.5% year on year to $5.99 billion, a reversal from the 1.7% decrease it recorded in the same quarter last year. Adjusted earnings are expected to come in at $0.65 per share. Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. CarMax has missed Wall Street's revenue estimates four times over the last two years. Looking at CarMax's peers in the automotive and marine retail segment, only AutoZone has reported results so far. It missed analysts' revenue estimates by 0.8%, delivering year-on-year sales growth of 2.4%. The stock traded up 2.6% on the results. Read our full analysis of AutoZone's earnings results at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we've identified a relatively under-the-radar profitable growth stock benefiting from the rise of AI, available to you FREE via this link.
Yahoo
03-04-2025
- Automotive
- Yahoo
Reflecting On Vehicle Retailer Stocks' Q4 Earnings: CarMax (NYSE:KMX)
As the craze of earnings season draws to a close, here's a look back at some of the most exciting (and some less so) results from Q4. Today, we are looking at vehicle retailer stocks, starting with CarMax (NYSE:KMX). Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need. The 4 vehicle retailer stocks we track reported a stunning Q4. As a group, revenues beat analysts' consensus estimates by 6.7%. Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 6.4% since the latest earnings results. Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States. CarMax reported revenues of $6.22 billion, up 1.2% year on year. This print exceeded analysts' expectations by 3%. Overall, it was a stunning quarter for the company with a solid beat of analysts' EPS estimates and an impressive beat of analysts' EBITDA estimates. 'I am pleased with the positive momentum that we are driving across our diversified business model. Our solid execution and a more stable environment for vehicle valuations enabled us to deliver robust EPS growth driven by increases in unit sales and buys, solid margins, growth in CAF income, and ongoing management of SG&A,' said Bill Nash, president and chief executive officer. CarMax delivered the slowest revenue growth of the whole group. The market was likely pricing in the results, and the stock is flat since reporting. It currently trades at $80.55. Is now the time to buy CarMax? Access our full analysis of the earnings results here, it's free. With a strong presence in the Southern and Central US, America's Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers. America's Car-Mart reported revenues of $325.7 million, up 8.7% year on year, outperforming analysts' expectations by 15.2%. The business had an incredible quarter with an impressive beat of analysts' EPS estimates and a solid beat of analysts' gross margin estimates. America's Car-Mart delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 18.3% since reporting. It currently trades at $45.47. Is now the time to buy America's Car-Mart? Access our full analysis of the earnings results here, it's free. With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers. Lithia reported revenues of $9.22 billion, up 20.2% year on year, exceeding analysts' expectations by 2.2%. The results were good as it also locked in a solid beat of analysts' EBITDA estimates and a decent beat of analysts' EPS estimates. Lithia delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. As expected, the stock is down 19.1% since the results and currently trades at $298.16. Read our full analysis of Lithia's results here. Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities. Camping World reported revenues of $1.20 billion, up 8.6% year on year. This result topped analysts' expectations by 6.6%. It was a stunning quarter as it also recorded an impressive beat of analysts' EBITDA estimates and a solid beat of analysts' gross margin estimates. The stock is down 23.7% since reporting and currently trades at $15.85. Read our full, actionable report on Camping World here, it's free. Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate. Join Paid Stock Investor Research Help us make StockStory more helpful to investors like yourself. Join our paid user research session and receive a $50 Amazon gift card for your opinions. Sign up here. Sign in to access your portfolio
