CarMax Is Defying The Odds In The Slowing Auto Industry

by Trefis Team
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CarMax (NYSE:KMX), the largest retailer of used vehicles in the United States, has seen its stock rise by ~50% year to date while running up by close to 10% over the last month. While the broader automobile industry has seen deliveries plateau, on account of economic uncertainty and an increasing unwillingness by millennials to buy cars, the used car market remains strong. Used car sales have held up, as average selling prices for new cars have been rising in the U.S. making pre-owned vehicles an increasingly popular alternative. Average selling prices for vehicles are up 29% over the last decade, per Edmunds. Over Q2 FY’20 (fiscal years end Feb), CarMax saw sales rise by over 9% to $5.2 billion, as the company continued to expand its store footprint while leveraging an omnichannel strategy that allows it to engage seamlessly with customers across its digital and physical stores. Moreover, the company has been repurchasing stock, reaffirming a strong outlook. Below, we take a look at how the company has fared over the last few years and what the outlook could be like.

View our interactive dashboard analysis on How CarMax Is Defying The Odds In The Slowing Auto Industry

How does Carmax’s Revenue Growth in 2019 compare with that in prior periods and what’s the forecast?

Total Revenues for CarMax moderately increased from $17.1 Bil in 2018 to $18.2 Bil in 2019; an increase of 6.15%.

This compares with Total Revenues growth of:

  • 13.5% in 2015 compared to 2014
  • 6.17% in 2016 compared to 2015
  • 4.79% in 2017 compared to 2016
  • 7.84% in 2018 compared to 2017

We expect Total Revenues growth to be 10% in 2020.

How does CarMax’s Total Expense in 2019 compare with that in prior periods and what’s the forecast?

Total Expense for CarMax moderately increased from $16.1 Bil in 2018 to $17.1 Bil in 2019; an increase of 6.25%.

This compares with Total Expense growth of:

  • 12.9% in 2015 compared to 2014
  • 6.32% in 2016 compared to 2015
  • 5.16% in 2017 compared to 2016
  • 7.99% in 2018 compared to 2017

We expect Total Expense growth to be 10% in 2020.

How does CarMax’s EBT in 2019 compare with that in prior periods and what’s the forecast?

EBT for CarMax increased moderately by 4.63% from $1.06 Bil in 2018 to $1.11 Bil in 2019.

We expect EBT to increase by 3.3% to $1.16 Bil in 2020.

How do CarMax’s Net Income and EPS over 2019 compare with that in prior periods and what’s the forecast?

For more information on CarMax’s Net Income and EPS, view our interactive dashboard analysis.

 

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