Carmax stock surges 10% on first quarter results

Carmax, Inc (NYSE:KMX) has made strong gains following an investor update

Rising stock price
Rising stock price

The Carmax, Inc (NYSE:KMX) stock price has gained around 10% so far today after it released first quarter results. They showed that the company is performing relatively well in my view, with EPS beating stock market expectations.

During the first quarter, net sales and operating revenues increased by 5.5% to $4.79 billion. Total used unit sales increased by 1.6%, while total wholesale unit sales moved 9.6% higher. However, used unit sales in comparable stores declined by 2.3% during the period.

Earnings per share came in at $1.33. This is a 17.7% increase on the comparable period and shows that the company continues to move ahead with its strategy. The stock market was expecting EPS of around $1.24, and this is a key reason why the Carmax stock price has moved higher so far today.

During the period, the company’s sales were negatively impacted by lower store traffic. Although this was partially offset by improved conversion, the company’s comparable period was a tough one to be judged against. Encouragingly, comparable store unit sales improved substantially from the final quarter of the 2018 fiscal year.

The company’s SG&A expenses increased by 8.6% versus the same quarter of the comparable period. It continues to invest in new technology platforms, while also seeking to improve the customer experience. In my opinion, this could prove to be a wise apportioning of capital, as it could enhance the company’s financial and investment outlook for the long run.

Looking ahead, I wouldn’t be surprised if the Carmax stock price continued to move higher. Investor sentiment seems to have improved following today’s update. Although comparable sales were relatively disappointing, the investment the company is making in its long-term growth prospects mean that I remain upbeat about its potential. As a result, I feel that further gains could be ahead over the coming years.

About Robert Stephens 116 Articles
Robert Stephens is a CFA Charterholder and works as an Equity Analyst. He is a keen private investor and has bought and sold stocks for 15 years, investing in a range of sectors and markets. He has previously written for Seeking Alpha and The Motley Fool, and now runs his own business. If you would like to contact Robert, please email [email protected] or contact him via one of the other methods on the 'Contact Us' page