The 10-second takeaway
For the quarter ended May 31 (Q1), CarMax beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew significantly. GAAP earnings per share expanded significantly.
Gross margins shrank, operating margins increased, net margins expanded.
CarMax notched revenue of $3.31 billion. The 13 analysts polled by S&P Capital IQ hoped for revenue of $3.18 billion on the same basis. GAAP reported sales were 19% higher than the prior-year quarter's $2.85 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.64. The 15 earnings estimates compiled by S&P Capital IQ predicted $0.59 per share. GAAP EPS of $0.64 for Q1 were 23% higher than the prior-year quarter's $0.52 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 15.7%, 30 basis points worse than the prior-year quarter. Operating margin was 7.2%, 10 basis points better than the prior-year quarter. Net margin was 4.3%, 10 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $3.10 billion. On the bottom line, the average EPS estimate is $0.55.
Next year's average estimate for revenue is $12.36 billion. The average EPS estimate is $2.17.
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 935 members out of 1,028 rating the stock outperform, and 93 members rating it underperform. Among 344 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 333 give CarMax a green thumbs-up, and 11 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 $46.75.
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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. The Motley Fool recommends CarMax. 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.
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