CarMax Group Earnings: Margins Shrink AGAIN as Profit Falls

S&P 500 (NYSE:SPY) component CarMax Group (NYSE:KMX) reported its results for the first quarter. 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.

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CarMax Group Earnings Cheat Sheet

Results: Net income for CarMax Group fell to $120.7 million (52 cents per share) vs. $125.5 million (54 cents per share) a year earlier. This is a decline of 3.8% from the year-earlier quarter.

Revenue: Rose 3.5% to $2.77 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: CarMax Group fell in line with the mean analyst estimate of 52 cents per share. Analysts were expecting revenue of $2.81 billion.

Quoting Management: “Although comparable store used unit sales were flat, solid execution resulted in strong used and wholesale gross profit per unit and higher CAF income,” said Tom Folliard, president and chief executive officer.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.5 percentage point to 13.8% from the year-earlier quarter. In that span, margins have contracted an average of 0.7 percentage point per quarter on a year-over-year basis.

Revenue has increased for four quarters in a row. Revenue increased 9.9% to $2.48 billion in the fourth quarter of the last fiscal year. The figure rose 6.7% in the third quarter of the last fiscal year from the year earlier and climbed 10.5% in the second quarter of the last fiscal year from the year-ago quarter.

The company fell in line with estimates last quarter after beating forecasts in the previous quarter with net income of 41 cents versus a mean estimate of net income of 40 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the second quarter has moved down from 53 cents a share to 52 cents over the last thirty days. For the fiscal year, the average estimate has moved down from $1.93 a share to $1.92 over the last seven days.

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

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