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CarMax Inc. (KMX - Free Report) posted adjusted earnings per share of 88 cents in second-quarter (ended Aug 31, 2016) fiscal 2017, highlighting an increase of 11.4% from 79 cents earned a year ago. However, earnings were in line with the Zacks Consensus Estimate.
Net sales and operating revenues in the reported quarter rose 2.9% year over year to $4 billion. However, the figure lagged the Zacks Consensus Estimate of $4.13 billion.
Used vehicle revenues appreciated 4.8% to $3.3 billion in the quarter, driven by a 7% increase in unit sales to 167,412 vehicles. Comparable-store used vehicle unit sales went up 3.1% in the quarter on improved conversion, partially offset by a decrease in store traffic. Average selling price of used vehicles went down 2.3% to $19,530.
Wholesale vehicle revenues dropped 5.3% to $560.4 million in the quarter. Unit sales fell 1.3% to 105,108 vehicles, due to one less auction date. Average selling price of wholesale vehicles fell 4.1% to $5,119.
Other sales and revenues decreased 4.8% to $136 million due to lower vehicle sales resulting from the disposal of two of the four new car franchises during fiscal 2016. Extended protection plan (“EPP”) revenues grew 17.1% to $75.1 million on an increase in used unit sales and pricing changes.
Gross profit improved 4.6% to $545.4 million from $521.4 million in the year-ago quarter.
CAF reported a 2.4% decrease in income to $96 million in second-quarter fiscal 2017 from $98.3 million a year ago. This resulted from an increase in the provision for loan losses and a decline in total interest margin percentage, partially offset by the effects of a rise in average managed receivables.
Store Openings
During the second quarter of fiscal 2017, CarMax opened three stores, of which two were in new markets (El Paso, TX and Bristol, TN). Subsequent to the end of the quarter, the company opened a store in Boise, ID, which is a new market.
In fiscal 2017, CarMax plans to open 15 stores. It also intends to open 13–16 stores in fiscal 2018.
Share Repurchase Program
During the quarter under review, CarMax spent $125.8 million to repurchase 2.4 million shares under its share buyback program. As of Aug 31, 2016, the company had $1.89 billion remaining under the program.
Financial Position
CarMax had cash and cash equivalents of $316.03 million as of Aug 31, 2016, up from $100.48 million as of Aug 31, 2015. Total debt rose to $797.7 million as of Aug 31, 2016, from $300.9 million as of Aug 31, 2015.
In the first half of fiscal 2017, CarMax used $39.8 million of cash in operations, down from $84.7 million in the prior-year period. Capital expenditures totaled $214.6 million in the first half of fiscal 2017, up from $145.7 million a year ago. Meanwhile, the company projects capital expenditures of around $450 million for fiscal 2017.
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CarMax (KMX) Posts In-Line Q2 Earnings, Misses Revenues
CarMax Inc. (KMX - Free Report) posted adjusted earnings per share of 88 cents in second-quarter (ended Aug 31, 2016) fiscal 2017, highlighting an increase of 11.4% from 79 cents earned a year ago. However, earnings were in line with the Zacks Consensus Estimate.
Net sales and operating revenues in the reported quarter rose 2.9% year over year to $4 billion. However, the figure lagged the Zacks Consensus Estimate of $4.13 billion.
Used vehicle revenues appreciated 4.8% to $3.3 billion in the quarter, driven by a 7% increase in unit sales to 167,412 vehicles. Comparable-store used vehicle unit sales went up 3.1% in the quarter on improved conversion, partially offset by a decrease in store traffic. Average selling price of used vehicles went down 2.3% to $19,530.
Wholesale vehicle revenues dropped 5.3% to $560.4 million in the quarter. Unit sales fell 1.3% to 105,108 vehicles, due to one less auction date. Average selling price of wholesale vehicles fell 4.1% to $5,119.
Other sales and revenues decreased 4.8% to $136 million due to lower vehicle sales resulting from the disposal of two of the four new car franchises during fiscal 2016. Extended protection plan (“EPP”) revenues grew 17.1% to $75.1 million on an increase in used unit sales and pricing changes.
Gross profit improved 4.6% to $545.4 million from $521.4 million in the year-ago quarter.
CARMAX GP (CC) Price, Consensus and EPS Surprise
CARMAX GP (CC) Price, Consensus and EPS Surprise | CARMAX GP (CC) Quote
CarMax Auto Finance (CAF)
CAF reported a 2.4% decrease in income to $96 million in second-quarter fiscal 2017 from $98.3 million a year ago. This resulted from an increase in the provision for loan losses and a decline in total interest margin percentage, partially offset by the effects of a rise in average managed receivables.
Store Openings
During the second quarter of fiscal 2017, CarMax opened three stores, of which two were in new markets (El Paso, TX and Bristol, TN). Subsequent to the end of the quarter, the company opened a store in Boise, ID, which is a new market.
In fiscal 2017, CarMax plans to open 15 stores. It also intends to open 13–16 stores in fiscal 2018.
Share Repurchase Program
During the quarter under review, CarMax spent $125.8 million to repurchase 2.4 million shares under its share buyback program. As of Aug 31, 2016, the company had $1.89 billion remaining under the program.
Financial Position
CarMax had cash and cash equivalents of $316.03 million as of Aug 31, 2016, up from $100.48 million as of Aug 31, 2015. Total debt rose to $797.7 million as of Aug 31, 2016, from $300.9 million as of Aug 31, 2015.
In the first half of fiscal 2017, CarMax used $39.8 million of cash in operations, down from $84.7 million in the prior-year period. Capital expenditures totaled $214.6 million in the first half of fiscal 2017, up from $145.7 million a year ago. Meanwhile, the company projects capital expenditures of around $450 million for fiscal 2017.
Zacks Rank
CarMax currently carries a Zacks Rank #3 (Hold).
Some better-ranked automobile stocks include Superior Industries International, Inc. (SUP - Free Report) , Tenneco Inc. and Standard Motor Products, Inc. (SMP - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.
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