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CarMax's (KMX) Q4 Earnings Beat Estimates, Sales Down Y/Y

CarMax Inc. KMX reported fourth-quarter fiscal 2023 (ended Feb 28, 2023) net earnings per share of 44 cents, topping the Zacks Consensus Estimate of 22 cents due to higher-than-anticipated gross profit per unit in the used and wholesale vehicle segments. But the bottom line fell from 98 cents per share recorded in the year-ago period. The auto retailer registered revenues of $5,722.5 million for the February-end quarter, which fell short of the Zacks Consensus Estimate of $5,829 million. The top line also contracted by 25.6% year over year.

Segmental Performance

CarMax’s used-vehicle net sales totaled $4,531.1 million for the reported quarter, down 21.1% year over year, owing to a decline in units sold. The metric also missed the consensus mark of $4,738 million. While the units sold in this segment tailed off 12.6% year over year to 169,884 vehicles, the average selling price of used vehicles fell 9.3% from the year-ago quarter to $26,598. Comparable store used-vehicle units declined 14.1%, while revenues fell 22% from the prior-year level. Used-vehicle gross profit per unit (GPU) came in at $2,277, slightly higher than the prior-year quarter’s $2,195, topping the consensus mark of $2,136.

For the fiscal fourth quarter, wholesale vehicle revenues tanked 41.6% from the year-ago level to $1,030.7 million. The reported figure was above the Zacks Consensus Estimate of $1,006 million. Units sold declined 19.3% to 120,330 while ASP dipped 27.8% to $8,297. Wholesale vehicle GPU came in at $1,187, down from the year-ago period’s $1,191 but topping the consensus mark of $928.

Other sales and revenues contracted 11.4% year over year to $160.6 million for the fiscal fourth quarter, missing the consensus mark of $168 million. CarMax Auto Finance witnessed a 36.1% year-over-year decline in income to $123.9 million in the February-end quarter.

Other Tidbits

Selling, general and administrative expenses fell 7.7% from the prior-year quarter to $572.8 million. The firm had cash/cash equivalents and long-term debt of $314.8 million and $1,909.3 million, respectively, as of Feb 28, 2023. CarMax envisions fiscal 2024 capex at around $450 million.

During the fiscal fourth quarter, CarMax did not buy back shares of common stock under the share repurchase program. As of Feb 28, 2023, it had $2.45 billion remaining under the share repurchase authorization.

The company opened five new stores in the fiscal fourth quarter. KMX currently operates more than 240 used car stores. In fiscal 2024, it targets to open 5 stores.

Zacks Rank & Key Picks

KMX currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few top-ranked players in the auto space are Geely Automobile Holdings Limited GELYY, BYD Company Limited BYDDY and Ferrari N.V. RACE, all of which sport a Zacks Rank #1.

Geely is engaged in automobile manufacturing and related areas. The Zacks Consensus Estimates for GELYY’s 2023 sales and earnings imply year-over-year growth of around 57.5% and 7.4%, respectively.

BYD is engaged in the research, development, manufacture and distribution of automobiles, secondary rechargeable batteries and mobile phone components. The Zacks Consensus Estimate for BYDDY’s 2023 sales implies year-over-year growth of around 175%.

Ferrari is engaged in designing, manufacturing and selling sports cars. The Zacks Consensus Estimates for RACE’s 2023 sales and earnings imply year-over-year growth of around 14% and 19.8%, respectively.

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