Yahoo Finance CarMax Q2 Preview: Can Shares Find New Life?
The Zacks Retail and Wholesale Sector has struggled more than the broader market in 2022, down nearly 25%.
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A company in the sector, CarMax KMX, is slated to pull the curtain back and unveil Q2 results on September 29th before market open.
CarMax is the largest retailer of used vehicles in the United States. Further, KMX is engaged in providing customers with a full range of related services, including financing vehicle purchases and selling extended warranties, accessories, and vehicle repair services.
The company carries a Zacks Rank #3 (Hold) with an overall VGM Score of a D.
How does the auto-retailer shape up heading into its print? Let’s take a closer look.
Share Performance & Valuation
CarMax shares have been hit hard in 2022, down nearly 40% and widely underperforming the general market.
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Over the last month, shares still haven’t been able to catch a break, down 12% and widely underperforming the general market in this timeframe as well.
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Still, shares trade at solid valuation multiples – the company’s 14.1X forward earnings multiple is well below its 17.1X five-year median and represents an enticing 41% discount relative to its Zacks Sector.
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Quarterly Estimates
Analysts have had mixed reactions to the quarter to be reported, with a singular downwards and upwards earnings estimate revision. The Zacks Consensus EPS Estimate of $1.44 reflects a 16% Y/Y drop in quarterly earnings.
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However, CarMax’s top line is in much better shape – the Zacks Consensus Sales Estimate of $8.7 billion reflects Y/Y revenue growth of 9% compared to year-ago quarterly sales of $8 billion.
Quarterly Performance & Market Reactions
CarMax carries a strong earnings track record, exceeding the Zacks Consensus EPS Estimate in eight of its previous ten prints. Just in its latest print, the auto-titan penciled in a 3.3% bottom-line beat.
Top-line results have also been substantial – KMX has registered nine top-line beats over its last ten quarters. Below is a chart illustrating the company’s revenue on a quarterly basis.
Image Source: Zacks Investment Research
In addition, the market has primarily reacted poorly in response to the company’s quarterly reports as of late, with shares moving downwards following three of its last four prints.
Putting Everything Together
KMX shares have faced adverse price action across several timeframes, widely underperforming the S&P 500.
Shares could be considered cheap, with the company’s forward earnings multiple residing below its five-year median and Zacks Sector.
Analysts have had mixed reactions to the quarter to be reported, and estimates allude to a decline in earnings but an uptick in revenue.
Additionally, the company has repeatedly exceeded quarterly estimates, but the market has had adverse reactions following the majority of its last three prints.
Heading into the release, CarMax KMX carries a Zacks Rank #3 (Hold) with an Earnings ESP Score of -2.5%.
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