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Author: Alan LittleDate: 2020-12-23

CarMax (KMX) shares 7% lower due to lack of Q4 guidance

CarMax (KMX) shares slumped 7% on Tuesday after the used-car retailer opted out of providing revenue guidance for the current quarter amid the uncertainty caused by the ongoing pandemic.

CarMax (KMX) shares fell 7% on Tuesday after the used-car retail giant decided to hold back on providing revenue guidance for Q4 amid the uncertainty caused by the COVID-19 pandemic.

It did, however, post Q3 beats as $1.42 per share earnings and $5.18bn revenue comfortably surpassed the $1.13 and $5bn Wall Street expectations.

Despite a challenging year, CarMax’s earnings per share climbed 38 cents compared to Q3 2019, and revenue also jumped 8.2% from $4.79bn.

The Virginia-based company said that recent store closures relating to a resurgence in COVID-19 cases had negatively impacted sales during the final weeks of Q3.

However, overall unit sales of used vehicles still eased 1% higher overall, though comparable-store used unit sales did drop off 0.8%.

CEO Bill Nash was in a bullish mood in a conference call on Tuesday as he talked up the company’s “robust fundamentals”.

He said that the pandemic was a near-term market challenge, but that the firm’s “diversified business model” would continue to lay the groundwork for strong performance.

A closer look at CarMax’s report also showed that its financing business thrived as income surged 54.7% to $176.4m.

There was also a 4.5% uptick in total used vehicle revenue as retail selling prices for units increased to almost $700.

While investors were pleased with the Q3 numbers, there was disappointment that no forward guidance was offered for fiscal Q4.

This meant that KMX traded lower on the New York Stock Exchange on Tuesday, declining 7.35% to $93.12 at around midday ET.

Analysts are still optimistic about CarMax though as the company has an overweight consensus with 12 buy, three hold and one sell ratings.





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