CarMax Reports Quarterly Earnings, Falls Short of EPS Estimates

CarMax, Inc. (NYSE: KMX) released its quarterly earnings report on November 6, 2023, revealing earnings per share (EPS) of $0.43. This figure fell short of the consensus estimate of $0.50 by $0.07, according to FiscalAI. Despite the earnings miss, the company reported robust revenue of $5.79 billion, surpassing expectations of $5.66 billion.

The earnings report highlighted a net margin of 1.98% and a return on equity of 8.51%. Following the announcement, CarMax’s stock opened at $41.01, reflecting a modest increase of 0.9%. Over the past year, the stock has experienced significant volatility, with a fifty-two week low of $30.26 and a high of $91.25.

Market Response and Analyst Ratings

The financial community has reacted with caution to CarMax’s performance. Analysts from various firms have adjusted their ratings and price targets for the company’s shares. On November 6, JPMorgan Chase & Co. reiterated an “underweight” rating, reducing its price target from $50.00 to $30.00. Similarly, the Royal Bank of Canada also lowered its target price from $59.00 to $34.00 while maintaining a “sector perform” rating.

Other firms have issued mixed perspectives. Oppenheimer reaffirmed a “market perform” rating, while Evercore ISI increased its price target from $35.00 to $37.00 with an “in-line” rating. Overall, the consensus rating for CarMax stands at “Reduce,” with an average target price of $41.69.

Institutional Investments and Market Position

Institutional investors have also been active in adjusting their positions in CarMax. CYBER HORNET ETFs LLC acquired a new stake valued at approximately $28,000 in the second quarter. Meanwhile, MUFG Securities EMEA plc and Advisory Services Network LLC made new investments of about $30,000 and $32,000, respectively.

Notably, Brown Brothers Harriman & Co. increased its holdings by 13.6%, owning 2,573 shares valued at $115,000 after purchasing an additional 309 shares recently. Another firm, Ossiam, expanded its holdings by 19.5%, acquiring 1,713 shares valued at $115,000.

CarMax operates primarily as a retailer of used vehicles and related products in the United States. The company segments its operations into two main areas: CarMax Sales Operations and CarMax Auto Finance. The Sales Operations segment offers a diverse selection of used vehicles, including domestic, imported, and luxury models, as well as hybrid and electric vehicles.

In the current market landscape, CarMax’s performance and future prospects will depend on broader economic conditions and consumer demand for used vehicles. The adjustments from analysts and institutional investors reflect an ongoing evaluation of the company’s market position and growth potential.