CarMax First Quarter Earnings Sneak Peek

S&P 500 (NYSE:SPY) component CarMax (NYSE:KMX) will unveil its latest earnings on Thursday, June 21, 2012. CarMax is a retailer of used vehicles in the United States. The company also sells new vehicles under franchise agreements with Chrysler, General Motors, Nissan, and Toyota.

CarMax Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for profit of 53 cents per share, a decline of 3.6% from the company’s actual earnings for the same quarter a year ago. During the past three months, the average estimate has moved down from 55 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 54 cents during the last month. For the year, analysts are projecting net income of $1.93 per share, a rise of 7.8% from last year.

Past Earnings Performance: Last quarter, the company topped expectations by one cent, coming in at profit of 41 cents per share versus a mean estimate of net income of 40 cents per share. This followed two straight quarters of missing estimates.

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Stock Price Performance: Between March 21, 2012 and June 15, 2012, the stock price fell $6.78 (-19.7%), from $34.46 to $27.68. The stock price saw one of its best stretches over the last year between November 23, 2011 and December 6, 2011, when shares rose for nine straight days, increasing 16.9% (+$4.52) over that span. It saw one of its worst periods between January 23, 2012 and January 31, 2012 when shares fell for seven straight days, dropping 6.9% (-$2.27) over that span.

Wall St. Revenue Expectations: Analysts are projecting a rise of 6% in revenue from the year-earlier quarter to $2.84 billion.

Balance Sheet Analysis: The company’s current ratio of assets to liabilities came in at 2.87 last quarter. Having a ratio above 2:1 is usually considered a good indicator of a company’s liquidity and ability to meet creditor demands. The company regressed in this liquidity measure from 3.1 in the third quarter of the last fiscal year to the last quarter driven in part by an increase in liabilities. Current liabilities increased 21.6% to $646.3 million while assets rose 12.4% to $1.85 billion.

Key Stats:

After experiencing income increases the last three quarters, the company is hoping to keep the good news coming with this earnings announcement. Net income rose 3.7% in the second quarter of the last fiscal year and 0.5% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year.

On the top line, the company is looking to build on four-straight revenue increases heading into this earnings announcement. Revenue rose 18.5% in the first quarter of the last fiscal year, 10.5% in the second quarter of the last fiscal year and 6.7% in the third quarter of the last fiscal year before increasing again in the fourth quarter of the last fiscal year of the last fiscal year.

A Look Back: In the fourth quarter of the last fiscal year, profit rose 3.7% to $92.8 million (40 cents a share) from $89.5 million (39 cents a share) the year earlier, exceeding analyst expectations. Revenue rose 9.9% to $2.48 billion from $2.25 billion.

Analyst Ratings: With nine analysts rating the stock a buy, none rating it a sell and two rating the stock a hold, there are indications of a bullish stance by analysts.

Competitors to Watch: Copart, Inc., America’s Car-Mart, Inc., KAR Auction Services Inc, AutoNation, Penske Automotive Group, Inc., Group one Automotive, Inc., and Sonic Automotive Inc.

(Company fundamentals by Xignite Financials. Earnings estimates provided by Zacks)

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