What happened
Shares of used car retailer CarMax (KMX 2.80%), which is the nation's largest retailer of used autos, are rising on Tuesday. The stock jumped as much as 10.2% but is up about 8% as of 10:35 a.m. ET.
The stock's gain follows the company's fiscal fourth-quarter update, which featured better-than-expected earnings per share, even as revenue fell sharply year over year. Further, the company reaffirmed its long-term vehicle unit sales and financial targets.
So what
CarMax's fiscal fourth-quarter revenue fell 25.6% year over year to $5.7 billion as a surge in broader-market used car sales fades into the rearview mirror. Used vehicle unit sales fell 12.6% year over year and wholesale vehicle sales declined 19.3%. Over this same time frame, used and wholesale average selling prices declined 9.3% and 27.8%, respectively.
Earnings per share plummeted, falling from $0.98 in the year-ago quarter to $0.44. Though this metric was significantly better than analysts were estimating. The consensus analyst estimate for the quarter called for earnings per share of $0.24. CarMax's $5.7 billion in revenue, however, was below analysts' average forecast for $6.04 billion in revenue.
"We are confident that we are well positioned to continue leading the used car industry and to accelerate growth when the market improves," said CarMax CEO Bill Nash in the company's earnings release.
Now what
Importantly, CarMax said it was reaffirming its long-term targets, which were most recently updated in April of last year. Those targets are to sell between 2 million and 2.4 million vehicles annually by fiscal 2026 and generate between $33 billion and $45 billion annual revenue by the same year.
For context, CarMax sold a total of about 1.4 million units in fiscal 2023, which it just wrapped up. Revenue for the period was $29.7 billion.
