Yahoo Finance Falling Sales Volume & ASPs to Hurt CarMax (KMX) Q4 Earnings
CarMax Inc. KMX is slated to release fourth-quarter fiscal 2023 results on Apr 11, before the opening bell. The Zacks Consensus Estimate for the quarter’s earnings and revenues is pegged at 22 cents per share and $5.87 billion, respectively.
The used car dealership chain missed earnings estimates in the last reported quarter amid lower-than-anticipated revenues across all segments. CarMax surpassed earnings estimates in one of the trailing four quarters and missed thrice, with the average negative surprise being 30.58%. This is depicted in the graph below:
CarMax, Inc. Price and EPS Surprise
CarMax, Inc. price-eps-surprise | CarMax, Inc. Quote
Trend in Estimate Revision
The Zacks Consensus Estimate for CarMax’s fiscal fourth-quarter earnings per share has been revised downward by 2 cents in the past 30 days. The bottom-line projection indicates a year-over-year decline of 77.5%. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year contraction of 23.6%.
Factors to Note
The estimated decline in total vehicles sold by CarMax in the fourth quarter of fiscal 2023 is likely to have played spoilsport. The Zacks Consensus Estimate for used and wholesale units sold during the to-be-reported quarter is pegged at 169,068 and 109,408, respectively, implying a decline from the year-ago period’s level of 194,318 and 149,095 units.
Additionally, falling average selling prices are likely to have clipped revenues further. For the February-end quarter, the consensus estimate for used vehicle ASP is pegged at $27,710, indicating a drop from the year-ago figure of $29,310. The consensus estimate for wholesale vehicle ASP is pegged at $9,090, indicating a fall from the year-ago figure of $11,500.
Consequently, the Zacks Consensus Estimate for CarMax’s net sales from used vehicles is $4,738 million, implying a 17.4% year-over-year decline. The Zacks Consensus Estimate for quarterly net sales of wholesale vehicles is pegged at $1,006 million, indicating a decrease from the prior-year period’s $1,766 million.
Lower year-over-year revenues, commodity cost inflation and logistical challenges are likely to have weighed on gross profits as well. The Zacks Consensus Estimate for quarterly gross profit from the used-vehicle segment is pegged at $366 million, implying a decline from $427 million reported in the year-earlier quarter. The consensus mark for quarterly gross profit from the wholesale vehicle segment is pegged at $104 million, suggesting a decline from $178 million reported in the prior-year quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for CarMax this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. This is not the case here.
Earnings ESP: CarMax has an Earnings ESP of -10.78%. This is because the Most Accurate Estimate of earnings is pegged 2 cents lower than the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: CarMax currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
CarMax’s key peers include O’Reilly Automotive ORLY, Advance Auto Parts AAP and AutoZone AZO.
O’Reilly released fourth-quarter 2022 results on Feb 8. It reported adjusted earnings per share of $8.37, beating the Zacks Consensus Estimate of $7.71 on higher-than-expected comps growth. The bottom line increased 10% from $7.64 in the prior-year quarter. Quarterly revenues of $3.64 billion topped the consensus mark of $3.51 billion and were 11% higher than the prior-year figure of $3.29 billion.
For 2023, O’Reilly expects total revenues in the range of $15.2-$15.5 billion. Earnings per share are expected between $35.75 and $36.25. The forecast for comparable store sales growth is in the range of 4-6%. The free cash flow projection is in the band of $1.8-$2.1 billion. Capital expenditures are expected within the range of $750-$800 million. The company intends to open 180-190 stores this year.
Advance Auto reported fourth-quarter 2022 results on Feb 28. It reported adjusted earnings of $2.88, increasing 39.1% from the year-ago quarter figure and outpacing the Zacks Consensus Estimate of $2.41 a share. Advance Auto generated net revenues of $2,474 million, surpassing the Zacks Consensus Estimate of $2,422 million and increasing 3.2% from the year-ago reported figure.
Advance Auto estimates 2023 net sales in the band of $11.4-$11.6 billion. Comparable store sales are envisioned to range between 1%-3%. Adjusted operating income margin is envisioned in the range of 7.8%-8.2%. Advance Auto expects its 2023 capex to be in the range of $300-$350 million. The company targets a minimum FCF of $400 million. EPS is forecast between $10.2 and $11.2. It aims to open 60 to 80 new stores this year.
AutoZone posted second-quarter fiscal 2023 results on Feb 28. It reported earnings of $24.64 per share, up 10.5% year over year, and surpassed the Zacks Consensus Estimate of $21.33 per share. Net sales grew 9.5% to $3,690.9 million. The top line beat the Zacks Consensus Estimate of $3,539 million. Gross profit increased to $1,930 million from the prior-year quarter’s figure of $1,785 million.
As of Feb 11, 2023, AutoZone had cash and cash equivalents of $301.3 million, up from $239.4 million on Feb 12, 2022. The total debt amounted to $7,042.3 million as of Feb 11, marking an increase from $5,840.8 million on Feb 12, 2022. Under its share repurchase program, AutoZone repurchased 372,000 shares of its common stock for $906 million during the fiscal second quarter of 2023, at an average price of $2,434 per share.
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O'Reilly Automotive, Inc. (ORLY) : Free Stock Analysis Report
Advance Auto Parts, Inc. (AAP) : Free Stock Analysis Report
AutoZone, Inc. (AZO) : Free Stock Analysis Report
CarMax, Inc. (KMX) : Free Stock Analysis Report
