On March 29, CarMax (NYSE:KMX) released earnings for the fourth quarter ended Feb. 28.

  • Strong store and Internet traffic led to double-digit sales growth of 16%.
  • Problems at a new car franchise resulted in an asset impairment charge of $0.01 per share. That was offset by a $0.01 gain for "favorable CarMax Auto Finance items."
  • CarMax receives a three-star rating in Motley Fool CAPS, while its rival United Auto Group (NYSE:UAG) only rates two stars.

(Figures in millions, except per-share data)

Income Statement Highlights

Q4 2007

Q4 2006

Change

Sales

$1,882.8

$1,623.8

16.0%

Net Profit

$42.1

$36.7

14.9%

EPS

$0.19

$0.17

11.8%

Diluted Shares

219.8

213.3

3.0%

Get back to basics with the income statement.

Margin Checkup

Q4 2007

Q4 2006

Change*

Gross Margin

12.8%

12.8%

0.0

Operating Margin

3.8%

3.7%

0.1

Net Margin

2.2%

2.3%

(0.1)

*Expressed in percentage points

Margins are the earnings engine.

Balance Sheet Highlights

Assets

Q4 2007

Q4 2006

Change

Cash + ST Invest.

$19.5

$21.8

(10.6%)

Accounts Rec.

$71.4

$76.6

(6.8%)

Inventory

$836.1

$669.7

24.8%

Liabilities

Q4 2007

Q4 2006

Change

Accounts Payable

$254.9

$188.6

35.1%

Long-Term Debt

$33.7

$134.8

(75.0%)

The balance sheet reflects the company's health.

Cash Flow Highlights

YTD 2007

YTD 2006

Change

Cash From Ops.

$136.8

$117.5

16.4%

Capital Expenditures

$191.8

$194.4

(1.4%)

Free Cash Flow

($55.0)

($76.9)

N/A

Free cash flow is a Fool's best friend.

Related Foolishness:

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