CarMax
The 10-second takeaway
For the quarter ended Nov. 30 (Q3), CarMax beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly and GAAP earnings per share grew.
Gross margins contracted, operating margins shrank, net margins were steady.
Revenue details
CarMax reported revenue of $2.60 billion. The 12 analysts polled by S&P Capital IQ wanted to see net sales of $2.46 billion on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $2.32 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS details
EPS came in at $0.41. The 15 earnings estimates compiled by S&P Capital IQ predicted $0.39 per share. GAAP EPS of $0.41 for Q3 were 14% higher than the prior-year quarter's $0.36 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
Margin details
For the quarter, gross margin was 13.3%, 240 basis points worse than the prior-year quarter. Operating margin was 3.4%, 230 basis points worse than the prior-year quarter. Net margin was 3.6%, about the same as the prior-year quarter.
Looking ahead
Next quarter's average estimate for revenue is $2.67 billion. On the bottom line, the average EPS estimate is $0.44.
Next year's average estimate for revenue is $10.67 billion. The average EPS estimate is $1.83.
Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 813 members out of 904 rating the stock outperform, and 91 members rating it underperform. Among 302 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 288 give CarMax a green thumbs-up, and 14 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 $36.21.
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