CarMax Inc. (NYSE:KMX) Earnings And Technicals
On Tuesday morning before the market opened, CarMax announced first-quarter earnings that came up short of analyst expectations and sent shares tumbling in the pre-market session. The company announced first quarter earnings of 90 cents per share on $4.13 billion in sales while analysts were looking for 92 cents earnings per share on $4.21 billion in sales. Currently analysts have an average price target of $58.21.
Looking at the chart you will see that shares are getting crushed in the pre-market with lows coming in at $47.95 after closing Monday at $50.63 equaling a 5.2% decrease in value. However, we should see some support come in at $48 followed by the $47 level with resistance coming at $50 and $52.91, where the 200-day moving average is currently sitting. Look for shares to be more volatile than normal with increased volume and range. Shares were starting to look better recently as they continued to test the 200-day moving average but now we will most likely see some more pressure on shares as earnings were weaker than expected.
Sales
Total used vehicle unit sales grew 4.0% and comparable store used unit sales rose 0.2% versus the prior year’s first quarter. The comparable store sales performance reflected the combination of an improvement in conversion that more than offset a decrease in store traffic. Our sales performance included a reduction in the Tier 3 sales mix to 11.9% of used unit sales from 14.7% in the prior year’s first quarter. Tier 3 sales represent those financed by our Tier 3 third-party finance providers (those to whom we pay a fee) and those in CAF’s Tier 3 loan origination program. For the non-Tier 3 customer base, comparable store used unit sales rose 3.6% . . . Other sales and revenues declined 10.9% year-over-year, primarily reflecting a decrease in new vehicle sales (which are now included in other sales and revenues) due to the disposal of two of our four new car franchises during fiscal 2016. Extended protection plan (EPP) revenues increased 6.3%, largely reflecting improved margins and the growth in our used unit sales. Net third-party finance fees improved by 29.8%, primarily due to the reduced proportion of our sales attributable to Tier 3 finance providers. – MarketWatch
KMX Profile
CarMax Inc., through its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates in two segments, CarMax Sales Operations and CarMax Auto Finance. It offers customers a range of makes and models of used vehicles, including domestic and imported vehicles; sells vehicles that do not meet its retail standards to licensed dealers through on-site wholesale auctions; and provides extended protection plans to customers at the time of sale. The company also offers reconditioning and vehicle repair services; and provides financing alternatives for retail customers across a range of credit spectrum through its CarMax Auto Finance and arrangements with other financial institutions. In addition, it sells new vehicles under franchise agreements. As of February 29, 2016, the company operated 158 used car stores in 78 metropolitan markets. The company was founded in 1993 and is based in Richmond, Virginia. – YahooFinance