CarMax (NYSE:KMX) Releases Earnings Results, Beats Expectations By $0.11 EPS

CarMax (NYSE:KMX) announced its quarterly earnings data on Thursday. The company reported $0.43 earnings per share for the quarter, beating the consensus estimate of $0.32 by $0.11, FiscalAI reports. CarMax had a return on equity of 8.51% and a net margin of 1.98%.The business had revenue of $5.79 billion during the quarter, compared to analyst estimates of $5.66 billion. During the same period in the prior year, the company earned $0.81 earnings per share. CarMax’s revenue was down 6.9% compared to the same quarter last year.

Here are the key takeaways from CarMax’s conference call:

• The board named David McCreight Interim President & CEO with Tom Folliard as Interim Executive Chair and said it is conducting an urgent search for a permanent CEO to lead a turnaround.
• Management will be lowering retail margins and increasing marketing to shrink the price gap versus the marketplace — a strategy they expect to improve sales trends but that will pressure near?term earnings.
• CarMax is targeting at least $150 million of SG&A exit?rate savings by end of FY2027 and has already taken an ~30% reduction in customer experience center headcount as the first step.
• Q3 results showed weakness — total sales of $5.8 billion (down 6.9%), retail unit comps down ~9%, and diluted EPS of $0.43 versus $0.81 a year ago, with total gross profit down 13%.
• CarMax Auto Finance continues to expand — CAF income rose ~9% to $175 million, originations were $1.8B, the company executed an off?balance?sheet (25B) transaction, and plans near?nationwide rollouts of redesigned MaxCare products in Q1 FY27.

CarMax Price Performance

Shares of NYSE:KMX opened at $39.37 on Friday. The company has a 50 day moving average of $39.35 and a 200 day moving average of $53.00. The company has a current ratio of 2.46, a quick ratio of 1.06 and a debt-to-equity ratio of 2.87. The stock has a market cap of $5.78 billion, a P/E ratio of 11.55, a P/E/G ratio of 1.01 and a beta of 1.29. CarMax has a 12 month low of $30.26 and a 12 month high of $91.25.

Institutional Inflows and Outflows

Several institutional investors have recently made changes to their positions in KMX. CYBER HORNET ETFs LLC bought a new stake in CarMax during the second quarter valued at $28,000. MUFG Securities EMEA plc purchased a new stake in shares of CarMax in the 2nd quarter valued at about $30,000. Advisory Services Network LLC bought a new stake in shares of CarMax during the 3rd quarter valued at about $32,000. Brown Brothers Harriman & Co. grew its holdings in shares of CarMax by 13.6% during the third quarter. Brown Brothers Harriman & Co. now owns 2,573 shares of the company’s stock worth $115,000 after purchasing an additional 309 shares in the last quarter. Finally, Ossiam grew its holdings in shares of CarMax by 19.5% during the second quarter. Ossiam now owns 1,713 shares of the company’s stock worth $115,000 after purchasing an additional 280 shares in the last quarter.

Analysts Set New Price Targets

Several research analysts have recently weighed in on KMX shares. Oppenheimer reiterated a “market perform” rating on shares of CarMax in a research note on Friday, September 26th. Stephens downgraded shares of CarMax from an “overweight” rating to an “equal weight” rating and reduced their target price for the stock from $53.00 to $42.00 in a research note on Tuesday, October 7th. Morgan Stanley set a $35.00 price target on shares of CarMax in a research report on Monday, December 8th. Seaport Res Ptn downgraded shares of CarMax from a “strong-buy” rating to a “hold” rating in a report on Sunday, September 28th. Finally, Evercore ISI reissued a “reduce” rating on shares of CarMax in a report on Friday. One equities research analyst has rated the stock with a Strong Buy rating, one has assigned a Buy rating, eleven have issued a Hold rating and six have assigned a Sell rating to the company’s stock. Based on data from MarketBeat, the stock currently has an average rating of “Reduce” and a consensus target price of $41.54.

CarMax Company Profile

CarMax, Inc, through its subsidiaries, operates as a retailer of used vehicles and related products in the United States. It operates in two segments: CarMax Sales Operations and CarMax Auto Finance. The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services.