- William Blair analyst Sharon Zackfia reiterated an Outperform rating on the shares of CarMax Inc KMX.
- Citing persistent industry headwinds, the analyst has lowered fiscal fourth-quarter used unit comparable sales projection to -11% to -12%, in-line with the consensus.
- The analyst also lowered the February quarter EPS estimate by $0.04 to $0.21, similar to the consensus of $0.21.
- The wholesale sales are expected to decline 40%-plus Y/Y due to reallocation of some cars from wholesale to retail to meet the demand for lower-priced cars.
- The analyst, as previously stated, projects a roughly $90 year-over-year increase in retail GPU to $2,287 on strong inventory management.
- Following a hiatus after the collapse of SVB, the auto ABS (Asset-Backed Securities) market is opening up, with about four deals priced in late March, said the analyst.
- As a result, the analyst feels the time favors CarMax to do its typical ABS in late April.
- For FY24, the analyst expects comparable sales to improve sequentially as the year progresses, with an inflection into positive territory in the second half.
- CarMax remains a very well-managed profitable company in a very large market.
- Managing a large pool of fast-depreciating assets, reliance on asset-backed securitizations to fund CarMax Auto Finance, and the inherent economic sensitivity associated with selling big-ticket discretionary items are some of the company's risks.
- Also Read: Car Market Did Something It Hasn't Done In 8 Months: Pay Attention This Friday
- Price Action: KMX shares are trading higher by 2.00% at $63.69 on the last check Thursday.
KMXCarMax Inc
$78.363.12%
Edge Rankings
Momentum41.17
Growth21.09
Quality64.04
Value71.85
Price Trend
Short
Medium
Long
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