CarMax share price is up 10% on Tuesday: find out why

CarMax Inc (NYSE: KMX) opened about 10% up this morning after reporting profit for its fourth financial quarter that topped Street expectations by a massive margin.

CarMax shares up on robust margins

The Richmond-headquartered firm recorded a 21.1% decline in used vehicles sales and 41.6% in wholesale vehicles sales. Still, CEO Bill Nash said in the earnings press release:

On the plus side, retail gross profit per used vehicles climbed 3.7% in the recently concluded quarter to $2,277. Versus their recent low, CarMax shares are now up nearly 30%.

Notable figures in CarMax Q4 earnings report

• Net income printed at $69 million versus the year ago $160 million
• Per-share earnings also tanked from 98 cents to 44 cents
• Revenue slipped 25.6% on a year-over-year basis to $5.72 billion
• FactSet consensus was 20 cents EPS on $6.11 billion in revenue  
• Comparable sales dropped 14.1% - worse than expected

Income from CarMax Auto Finance (CAF) also decline 36.1% in Q4. According to the company’s earnings press release:

For potential investors, it should also be of interest to know that the Wall Street currently has a consensus “hold” rating on CarMax stock with a meaningful downside to $58 a share on average.