CarMax plunges 11% after earnings

CarMax (KMX.US) is one of the worst performing Wall Street stock today. Share price of the US used car dealer plunges by double-digits today, following release of fiscal-Q4 2024 results (calendar December 2023 - February 2024 period).

Fiscal-Q4 results from CarMax turned out to be a disappointment. Company missed sales and profit expectations. Net sales unexpectedly dropped, driven by weaker sales in both retail and wholesale segments. While retail unit sales were higher year-over-year, drop in wholesale unit sales. Company managed to turn in slightly higher gross profit from retail sales compared to a year ago quarter, but profit was still weaker than expected. EPS at $0.32 turned out to be much lower than $0.44 reported a year ago and lower than $0.45 expected for this quarter. However, the miss here would be even bigger if it wasn't for a 19% YoY jump in finance unit profit, which was driven lower loan losses.

CarMax expects low-single-digit sales growth in fiscal-2025 as well as capital expenditures of $500-550 million during the year.

Fiscal-Q4 2024 results

• Net sales: $5.63 billion vs $5.82 billion expected (-1.7% YoY)
  • Used vehicle sales: $4.50 billion vs $4.60 billion expected (-0.7% YoY)
  • Wholesale vehicle sales: $974.3 million vs $1.05 billion expected (-5.5% YoY)
  • Other sales: $154.8 million vs $159.9 million expected
    • Extended protection plan revenues: $98.0 million vs $99.7 million expected (-6.0% YoY)
    • Third-party finance fees: $3.50 million vs $0.37 million profit expected
• Used vehicle unit sales: 287,603 (-0.9% YoY)
  • Retail: 172,057 (+1.3% YoY)
  • Wholesale: 115,546 (-4.0% YoY)
• Vehicles purchased: 234 000 (-10.8% YoY)
  • Purchased from consumers: 213,000 (-14.1% YoY)
  • Purchased from dealers: 21,000 (+44.8% YoY)
• SG&A expenses: $580.9 million (+1.4% YoY)
• Used vehicle gross profit: $387.3 million vs $390.2 million (+0.1% YoY)
• Wholesale vehicle gross profit: $129.4 million vs $129 million expected (-9.4% YoY)
• CarMax Auto Finance income: $147.3 million (+18.9% YoY)
• EPS: $0.32 vs $0.45 expected ($0.44 a year ago)

Fiscal-2025 guidance

• Capital expenditures: $500-550 million vs $405 million expected
• Gross profit: low-single digit growth  growth

CarMax (KMX.US) launched today's trading with a big bearish price gap and is trading over 11% lower at press time. Taking a look at the chart at D1 interval, we can see that the price slumped below $79.00 resistance zone today, as well as 50- and 200-session moving averages. The initial drop has been halted at the mid-term support in the $68.50 area, and the stock has recovered slightly since.

Source: xStation5