CarMax Drives Up Earnings: Fool by Numbers

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On March 29, CarMax (NYSE: KMX) released earnings for the fourth quarter ended Feb. 28.

• Strong store and Internet traffic led to double-digit sales growth of 16%.
• Problems at a new car franchise resulted in an asset impairment charge of $0.01 per share. That was offset by a $0.01 gain for "favorable CarMax Auto Finance items."
• CarMax receives a three-star rating in Motley Fool CAPS, while its rival United Auto Group (NYSE: UAG) only rates two stars.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q4 2007	Q4 2006	Change
Sales	$1,882.8	$1,623.8	16.0%
Net Profit	$42.1	$36.7	14.9%
EPS	$0.19	$0.17	11.8%
Diluted Shares	219.8	213.3	3.0%

Get back to basics with the income statement.

Margin Checkup

	Q4 2007	Q4 2006	Change*
Gross Margin	12.8%	12.8%	0.0
Operating Margin	3.8%	3.7%	0.1
Net Margin	2.2%	2.3%	(0.1)

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets	Q4 2007	Q4 2006	Change
Cash + ST Invest.	$19.5	$21.8	(10.6%)
Accounts Rec.	$71.4	$76.6	(6.8%)
Inventory	$836.1	$669.7	24.8%

Liabilities	Q4 2007	Q4 2006	Change
Accounts Payable	$254.9	$188.6	35.1%
Long-Term Debt	$33.7	$134.8	(75.0%)

The balance sheet reflects the company's health.

Cash Flow Highlights

	YTD 2007	YTD 2006	Change
Cash From Ops.	$136.8	$117.5	16.4%
Capital Expenditures	$191.8	$194.4	(1.4%)
Free Cash Flow	($55.0)	($76.9)	N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

• CarMax Rolls Over Wall Street
• AutoNation Gears Up
• America's Car-Mart Slows Down

CarMax is a Foolish pick in Philip Durell's Inside Value newsletter. What is Wall Street overlooking now? Inside Value gives subscribers the big names with the best prospects for good returns. A free trial gives you all the picks and how they're doing.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean. This data has been provided by Netscribes. To provide feedback on this article, please click on the "feedback" button below.