CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 84% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

CarMax shares sink after auto dealer misses estimates

By Susan Mate

17:00, 30 September 2021

CarMax car lot
CarMax car lot - Photo: Shutterstock

Auto dealer CarMax’s shares fell about 11% after its fiscal second-quarter earnings released Thursday did not meet investor expectations.

The company (KMX) reported per-share earnings of $1.72 (£1.28) from $8bn sales, considerably down from Wall Street’s earnings forecast of $1.87 a share from $6.9bn in sales.

Although sales were strong, operating profit margins were about 5% instead of the 6% analysts had been expecting.

Gross profits on used vehicle sales down significantly

Gross profit earned for every used vehicle sold was about $2,185, significantly down from $2,214 earned in the same period last year. Record net revenues were $8bn, up 48.7% from the prior year’s second quarter.

“Our omni-channel platform, in combination with our unique customer offerings… led to a record level of used sales for the second quarter and an all-time record for wholesale vehicle sales,” said CEO Bill Nash in the earnings release. Omni-channel refers to both the online and in-person sale of cars by CarMax.

“Of particular note is the performance of our online instant appraisal offering, which continues to exceed our expectations. Just six months after the nationwide launch, we have already purchased over 350,000 cars from consumers online with this digital product,” he said.

AMZN

124.45 Price
+1.460% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.13

AMD

118.21 Price
-0.480% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.05

TSLA

210.92 Price
+2.170% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.10

META

271.69 Price
+0.150% 1D Chg, %
Long position overnight fee -0.0255%
Short position overnight fee 0.0032%
Overnight fee time 21:00 (UTC)
Spread 0.11

The lower earnings will offset recent gains for the shares. Until Thursday, shares have gained about 55% year to date, well above the 16% comparable gain of the S&P. The company cited a 30% increase in costs such as sales and administration due to staffing increases, technology platforms and other initiatives.

Q2 earnings fall short after string of wins

Net interest income and profit margins have grown year over year at the company’s finance arm. However, the report breaks a string of four quarterly earnings wins coming out of the global economic downturn created by the Covid-19 pandemic.

CarMax officials hosted a conference call Thursday morning and investors and analysts were not surprised to hear the global shortage of automotive semiconductors is affecting new and used car inventories. The lack of chips resulted in about 5 million or 6 million fewer cars built than could have been in 2021.

With more than 220 locations, CarMax is the largest retailer of used autos in the US.

Read more: Online used car sales thrive in market upended by pandemic 

Rate this article

Capital Com is an execution-only service provider. The material provided on this website is for information purposes only and should not be understood as an investment advice. Any opinion that may be provided on this page does not constitute a recommendation by Capital Com or its agents. We do not make any representations or warranty on the accuracy or completeness of the information that is provided on this page. If you rely on the information on this page then you do so entirely on your own risk.

Still looking for a broker you can trust?

Join the 535.000+ traders worldwide that chose to trade with Capital.com

1. Create & verify your account 2. Make your first deposit 3. You’re all set. Start trading