Free Annual Reports
CarMax Floors It, Accelerates Earnings
CarMax (NYSE:KMX), the used car dealership chain, positively floored it and stomped the pedal for sensational first-quarter earnings. The company substantially increased revenue and blew past the finish line with its earnings increase.
IN PICTURES: 8 Tips For Starting Your Own Business
A Revved-Up Quarter
Emerging from the recession, CarMax has grown its earnings. Its net income for this fiscal first quarter was $101.1 million, up from $28.7 million last year's same quarter. The earnings per share was 44 cents, 41 cents on an adjusted basis, compared to 13 cents the quarter a year ago. Revenue was up to $2.26 billion from $1.83 billion.
The important same store sales number showed an increase of 9%, though CEO Tom Folliard said that even with gradually improving customer traffic, sales are still below pre-recession levels. Gross profit per vehicle increased 10% to $2,212. The company showed renewed strength in its fiscal year 2010 last year when it posted EPS of $1.28, an improvement over fiscal 2009 which saw only $0.26 EPS. This was achieved on slightly less revenue than the pre-recession year of fiscal 2008.
Used Auto Landscape
Business has been picking up for the chain used car dealerships. Competitor AutoNation (NYSE:AN) has shown better earnings numbers in its last full fiscal year, plus its first quarter of fiscal 2010. Revenue for the company hasn't yet returned to fiscal 2008 levels. Penske Auto Group (NYSE:PAG), which sells both new and used vehicles, also had a great recent earnings report in May. The company doubled its earnings and showed a revenue increase of 15.4%. Used vehicle sales outpaced those of new vehicles, as used vehicle sales rose 13% compared to a 27% decline in new vehicle sales.
Group 1 Automotive (NYSE:GPI), which is concentrated in major metropolitan areas across the U.S., has had more mixed results. It has seen revenues leap in its first quarter this year while earnings, which rebounded nicely in its fiscal 2009, are off a bit. S&P recently raised its outlook on Group 1, citing lower debt levels and increased earnings. Sonic Automotive (NYSE:SAH) also joined the party, with its earnings report in April showing doubled income along with a 13% sales increase.
Cars Equal Synergies
When investors poke around under the hood of the auto industry, they will notice that the repair market, with such heavy hitters as Auto Zone (NYSE:AZO) and Advance Auto Parts (NYSE:AAP) is doing extremely well. The resurgence of Ford Motors (NYSE:F) shows the gathering potential strength of the new car industry. Add the used car chains such as CarMax and the others to this mix, and you have a well-rounded improvement in an industry and its related ones.
CarMax Stock
The stock was recently trading at $21.60 a share, nearly in the middle of its 52-week price range. CarMax trades at around 17 times earnings, 15 times forward earnings. It's not an exorbitant multiple, but the stock may get bid up further as investors realize the accelerating prospects of this company. This stock is worth serious consideration as a buy at these levels or lower. (For more stock analysis, take a look at Retailers Still Humming Along.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: 8 Tips For Starting Your Own Business
A Revved-Up Quarter
Emerging from the recession, CarMax has grown its earnings. Its net income for this fiscal first quarter was $101.1 million, up from $28.7 million last year's same quarter. The earnings per share was 44 cents, 41 cents on an adjusted basis, compared to 13 cents the quarter a year ago. Revenue was up to $2.26 billion from $1.83 billion.
The important same store sales number showed an increase of 9%, though CEO Tom Folliard said that even with gradually improving customer traffic, sales are still below pre-recession levels. Gross profit per vehicle increased 10% to $2,212. The company showed renewed strength in its fiscal year 2010 last year when it posted EPS of $1.28, an improvement over fiscal 2009 which saw only $0.26 EPS. This was achieved on slightly less revenue than the pre-recession year of fiscal 2008.
Business has been picking up for the chain used car dealerships. Competitor AutoNation (NYSE:AN) has shown better earnings numbers in its last full fiscal year, plus its first quarter of fiscal 2010. Revenue for the company hasn't yet returned to fiscal 2008 levels. Penske Auto Group (NYSE:PAG), which sells both new and used vehicles, also had a great recent earnings report in May. The company doubled its earnings and showed a revenue increase of 15.4%. Used vehicle sales outpaced those of new vehicles, as used vehicle sales rose 13% compared to a 27% decline in new vehicle sales.
Group 1 Automotive (NYSE:GPI), which is concentrated in major metropolitan areas across the U.S., has had more mixed results. It has seen revenues leap in its first quarter this year while earnings, which rebounded nicely in its fiscal 2009, are off a bit. S&P recently raised its outlook on Group 1, citing lower debt levels and increased earnings. Sonic Automotive (NYSE:SAH) also joined the party, with its earnings report in April showing doubled income along with a 13% sales increase.
Cars Equal Synergies
When investors poke around under the hood of the auto industry, they will notice that the repair market, with such heavy hitters as Auto Zone (NYSE:AZO) and Advance Auto Parts (NYSE:AAP) is doing extremely well. The resurgence of Ford Motors (NYSE:F) shows the gathering potential strength of the new car industry. Add the used car chains such as CarMax and the others to this mix, and you have a well-rounded improvement in an industry and its related ones.
CarMax Stock
The stock was recently trading at $21.60 a share, nearly in the middle of its 52-week price range. CarMax trades at around 17 times earnings, 15 times forward earnings. It's not an exorbitant multiple, but the stock may get bid up further as investors realize the accelerating prospects of this company. This stock is worth serious consideration as a buy at these levels or lower. (For more stock analysis, take a look at Retailers Still Humming Along.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Free Annual Reports
