CarMax’s Q3 Earnings amp; Revenues Miss Estimates, Rise Y/Y

23 Dec 2015 | Author: | No comments yet »

CarMax’s Q3 Earnings & Revenues Miss Estimates, Rise Y/Y.

Used-car retailer Carmax recorded a disappointing third quarter as vehicle sales at stores open at least a year fell despite a strong period for the overall U.S. auto business.CarMax Inc. (KMX – Analyst Report) posted earnings per share of 63 cents in the third quarter of fiscal 2016, ended Nov 30, 2015, registering an increase of 5% from 60 cents earned a year ago.CarMax, Inc (NYSE:KMX) shares are trading down 7.63% ($4.36/share) in pre-market trading this morning after the company released their quarterly earnings.

Overall used vehicle sales rose 3.2% because of new stores. “We had a challenging sales quarter, which together with higher advertising expenses, contributed to the year-over-year decline in third quarter net earnings,” Carmax CEO Tom Folliard said. “However, we continued to grow both total revenues and EPS, reflecting the contributions from new stores and continued share repurchase activity.” CarMax, Inc (NYSE:KMX), a company that was founded in 1993, surprisingly as a subsidiary of Circuit City, reported earnings of just $0.63 per share for the quarter.

Net sales and operating revenues in the reported quarter increased 4.1% year over year to $3.54 billion, but fell short of the Zacks Consensus Estimate of $3.62 billion. For years now banks have struggled to increase their profits amid tough regulations, low interest rates and heavy legal bills following the financial crisis. As per the sources privy to the matter, the bank is expected to pay around $200 million in fines to the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission.

The improvement was primarily driven by an increase in average managed receivables, partially offset by lower interest margin and a rise in the provision for loan losses. In filings with the SEC, JP Morgan disclosed that it had received subpoenas relating to “client disclosure concerning conflicts associated with the firm’s sale and use of proprietary products.” Banks have been under intense scrutiny from the regulators lately.

While the Dodd-Frank Act mostly oversees the capital and liquidity levels of a bank, other strict regulations scrutinize the usual operations of financial institutions. The ratio turned negative, as 69 funds sold all their CarMax, Inc shares they owned while 145 reduced their positions. 38 funds bought stakes while 165 increased their total positions. According to the data on Bloomberg, majority of analysts providing coverage on JP Morgan Chase stock remain bullish. 27 out of 37 suggest a Buy, 10 recommend a Hold, while none of the analysts advocate a Sell. The company delivered mixed results for the current quarter, and raised its revenue outlook for the upcoming quarter based on increasing cloud momentum. Jim Whitehurst, President and CEO at Redhat, commented: “Our investments in technologies and partnerships continued to generate strong results as customers transform their IT infrastructure through the increasing adoption of open source technologies and cloud computing.” The company had previously announced a hybrid cloud partnership with Microsoft.

Deutsche Bank had weighed in on the company even before the earnings release, reiterating its bullish stance along with an upward revision in its price target from $75 to $90. The Company’s CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations, excluding financing provided by CAF. Receive News & Ratings Via Email – Enter your email address below to receive a concise daily summary of the latest news and analysts’ ratings with MarketBeat.com’s FREE daily email newsletter.

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