CarMax today
(As of 12/20/2024 at 05:45 PM ET)
- 52 week range
- $65.83
▼
$91.25
- P/E ratio
- 31.68
- Price target
- $85.17
Carmax New York Stock Exchange: CMX It faces headwinds in 2204 but is weathering the tough times well, selling more cars than expected and maintaining a strong margin. The company is not thriving but is growing and building its influence when economic headwinds subside.
From then until now, the company can implement its plans while buying back shares, and the buybacks are large. Activity in the third quarter exceeded $114 million and trimmed shares by 2.2% year-over-year.
CarMax stock buybacks are expected to continue due to margin strength in the third quarter and the $2.04 billion remaining under the current authorization. As far as business is concerned, demand for used cars is strong and expected to improve as interest rates decline. The only bad news is that the pace of rate cuts is slower than the Fed initially indicated, and it may take several more quarters for revenue growth to improve significantly.
CarMax outperforms in the third quarter, and its stock price soars higher
CarMax had a strong third quarter despite lower realized prices for used vehicles. The important detail is that demand remains strong, with volume up 5.8% across the network, driven by positive results across all sectors, and CEO William Nash says the market is stabilizing. Third-quarter results include net sales of $6.22 billion, up 1.1% year-over-year and 280 basis points better than expectations. Retail units sold increased by 5.4% and wholesale by 6.3%, offset by a 3.9% and 5.7% decrease in average price, respectively. Sales were based on a 7.9% increase in units purchased, supported by a 15% increase in digital channels.
CarMax stock forecast today
$85.17
1.06% upHe catches
Based on 14 analyst ratings
| High expectations | $105.00 |
|---|---|
| Average expectations | $85.17 |
| Low expectations | $50.00 |
CarMax stock forecast details
Margin news is the best in the report. The company expanded gross profit margin despite lower average selling price by controlling costs. Gross margin is partially offset by a 20 basis point increase in SG&A, but only partially. The net result is a 70 basis point improvement in net margin for supported gains in the bottom line. Net earnings of $125.4 million were up more than 50% year over year, leaving adjusted EPS at $0.81, $0.20 better than the consensus MarketBeat estimate, and up 56% year over year.
Carmax did not provide guidance but showed strength and returned to growth sooner than expected. Analyst consensus numbers for the fourth quarter, which expect a sequential seasonal decline but 3% year-over-year revenue growth, are likely too low. In this scenario, investors may expect analysts to raise their estimates for the quarter, year and next year and provide a tailwind to the market.
Carmax builds value for investors in Q3
Carmax’s third-quarter balance sheet highlights show it’s building value for investors. Details include a decrease in current assets associated with its cash balance, but total assets increased due to increased receivables and property, and long-term debt and total liabilities decreased. The result is a 2.75% increase in equity and reduced leverage, leaving the company in a strong financial position. The company’s net debt leverage is just 0.25x equity.
However, investing in CarMax is not without risk. Short sellers are interested in this stock and they have a reason to be. The used car market is stronger than expected but still struggling, and the impact of lower prices may already have been factored into the equation. The short interest rate before the report was more than 10%, not significantly high but high enough to create headwinds for stock prices.
Post-release price action involves a rise in prices at the open, but subsequent activity suggests short sellers are profiting from the rally. The market is forming a large bearish candle and is showing significant resistance at the top of the specified trading range. The bright side is that the market has not fallen below crucial support at the short-term moving average and may maintain its upward momentum over the next few weeks or months.
Before you consider CarMax, you’ll want to hear this.
MarketBeat tracks the highest-rated and best-performing research analysts on Wall Street and the stocks they recommend to their clients on a daily basis. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches up… and CarMax wasn’t on the list.
While CarMax currently has a “Hold” rating among analysts, top-rated analysts believe these five stocks are better buys.
View the five stocks here
Discover the next wave of investment opportunities with our report, 7 Stocks That Will Be Hot in 2025. Explore companies that are poised to replicate the growth, innovation and value creation of the tech giants that dominate today’s markets.
