On Dec. 20, auto dealer and Inside Value recommendation CarMax (NYSE:KMX) released its third-quarter earnings for the period ending Nov. 30.

  • Sales grew 24% for the quarter. Used-car sales powered the quarter with solid increases in both volume and price.
  • Margins increased across the board, causing net profit to almost double. You gotta love it when operating leverage works in your favor.
  • CarMax is a four-star stock in our community intelligence service CAPS, with 120 of 129 investors thinking it will outperform the S&P500.

(Figures in millions, except per-share data)

Income Statement Highlights

Q3 2006

Q3 2005

Change

Sales

$1,768.1

$1,424.0

24.2%

Net Profit

$45.4

$22.9

98.3%

EPS

$0.42

$0.22

90.9%

Diluted Shares

108.9

106.5

2.3%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2006

Q3 2005

Change*

Gross Margin

12.9%

12.4%

0.5

Operating Margin

4.2%

2.7%

1.5

Net Margin

2.6%

1.6%

1.0

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2006

Q3 2005

Change

Cash + ST Invest.

$12.4

$17.3

(28.4%)

Accounts Rec.*

$258.8

$216.0

19.8%

Inventory

$760.8

$606.4

25.5%


Liabilities

Q3 2006

Q3 2005

Change

Accounts Payable

$222.2

$173.3

28.2%

Long-Term Debt**

$118.4

$125.0

(5.3%)

*Includes loan receivables and securitized receivables
**Includes current portion

Learn the ways of the balance sheet.

Cash Flow Highlights

YTD 2006

YTD 2005

Change

Cash From Ops.

$137.6

$139.1

(1.1%)

Capital Expenditures*

$111.2

$75.3

47.7%

Free Cash Flow

$26.4

$63.8

(58.6%)

*Adjusted for assets sales

Find out why Fools always follow the money.

Related Companies:

  • AutoNation (NYSE:AN)
  • Group 1 Automotive (NYSE:GPI)
  • United Auto Group (NYSE:UAG).

Related Foolishness:

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At the time of publication, David Meier did not own shares in any of the companies mentioned. Fool rules for disclosure are here.