The 10-second takeaway
For the quarter ending Nov. 30 (Q3), CarMax met expectations on revenue and missed on earnings per share.
Compared to the prior-year quarter, revenue expanded, and earnings per share were unchanged.
Margins contracted across the board.
CarMax notched revenue of $2.3 billion. The 13 analysts polled by S&P Capital IQ foresaw revenue of $2.3 billion. Sales were 6.8% higher than the prior-year quarter's $2.1 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
EPS came in at $0.36. The 15 earnings estimates compiled by S&P Capital IQ averaged $0.38 per share. GAAP EPS of $0.36 for Q3 were 0.3% higher than the prior-year quarter's $0.36 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 15.7%, 60 basis points worse than the prior-year quarter. Operating margin was 5.7%, 50 basis points worse than the prior-year quarter. Net margin was 3.6%, 20 basis points worse than the prior-year quarter.
Source: S&P Capital IQ. Quarterly periods.
What does the future hold?
Next quarter's average estimate for revenue is $2.4 billion. On the bottom line, the average EPS estimate is $0.40.
Next year's average estimate for revenue is $9.9 billion. The average EPS estimate is $1.82.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 817 members out of 905 rating the stock outperform, and 88 members rating it underperform. Among 315 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 300 give CarMax a green thumbs-up, and 15 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on CarMax is outperform, with an average price target of $35.30.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.