CarMax (KMX) Shares Fall as EPS Misses on Macro Issues, Co. Raises Long-Term Targets

CarMax (NYSE: KMX) shares fell 5% in pre-open trading Tuesday following disappointing earnings, a possible warning sign for the used car boom. The company, however, raised long-term targets.

The company posted fourth-quarter earnings of $0.98 per share, $0.35 worse than the analyst estimate of $1.33. Revenue for the quarter rose 49% to $7.7 billion versus the consensus estimate of $7.67 billion. The CEO said the quarter was adversely affected by macro factors.

On a positive note, CarMax's share of the nationwide age 0-10 year old used vehicle market increased to a record 4.0% in the calendar year 2021, up approximately 13% from 3.5% in the calendar year 2020.

Total retail used vehicle unit sales declined 5.2% to 194,318, while total wholesale vehicle unit sales increased 43.8% to 149,095. Wholesale sales benefited from the significant increase in appraisal volume associated with the company's online appraisal offerings.

SG&A expenses increased 22.5% to $620.9 million due in part to continued spending on their technology platforms.

The company raised its long-term targets and now expects to sell between 2 million and 2.4 million vehicles through our combined retail and wholesale channels by fiscal 2026, up from 2 million forecasted in May 2021. Further, they expect to generate between $33 billion and $45 billion in revenue by fiscal 2026, up from $33 billion. They also re-affirmed the growth of its nationwide share of the age 0-10 used vehicle market to more than 5% by the end of calendar 2025.

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