CarMax tops Wall Street estimates for profit and sales in Q2

CarMax Inc. (NYSE: KMX) said on Thursday that its profit and sales in the fiscal second quarter came in stronger than Wall Street estimates. The company attributed its hawkish performance to pent-up demand in July and August after months of inactivity due to the Coronavirus pandemic that has so far infected more than 7 million people in the United States and caused over 200 thousand deaths.

CarMax closed roughly 6% down on Thursday. At £74 per share, it is now 5% up year to date in the stock market after recovering from a low of £35 per share in March when the impact of COVID-19 was at its peak. At the time of writing, CarMax has a market cap of £12.05 billion and a price to earnings ratio of 25.06.

CarMax Q2 financial results versus analysts’ estimates

CarMax printed £232.70 million of profit in the second quarter that translates to £1.40 per share. In the same quarter last year, it had recorded a lower £183.21 million of profit or £1.10 per share. According to FactSet, experts had forecast the company to register 86 pence per share of profit in the recent quarter.

In terms of revenue, America’s largest used cars retailer posted £4.21 billion versus a lower £4.08 billion in the comparable quarter of last year. FactSet consensus was for CarMax to not note an annualised growth in revenue. The U.S. company had topped estimates in the prior quarter (Q1) as well.

In terms of comparable-sales, the Richmond-based company said that it saw a decline in June. Same-store sales, however, recovered sharply in July and August resulting in a 1.2% year over year growth in the second quarter as a whole.

Wholesale car sales were 5.1% down in Q2

Wholesale car sales, CarMax added on Thursday, were 5.1% up versus the year-ago figure. In separate news from the U.S., Darden Restaurant revealed to have taken a hit to sales in Q1 on Thursday.

CEO Bill Nash of CarMax commented on the earnings report and said:

“We are very pleased to report record revenues and profitability this quarter. The talent and commitment of our associates as well as the diversity of our business model allowed us to capitalise on the improved market environment to deliver a record quarter. In addition to our strong financial performance, we also completed the roll out of our omni-channel offerings.”