Wrapping up Q3 earnings, we look at the numbers and key takeaways for the vehicle retailer stocks, including CarMax (NYSE:KMX) and its peers.
Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.
The 4 vehicle retailer stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 1.6%.
Luckily, vehicle retailer stocks have performed well with share prices up 16.3% on average since the latest earnings results.
CarMax (NYSE:KMX)
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States.
CarMax reported revenues of $7.01 billion, flat year on year. This print exceeded analysts’ expectations by 2.7%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ EBITDA estimates and a decent beat of analysts’ gross margin estimates.
“We are pleased with the continued improvement of the business in the second quarter, which reflects the positive impact of our durable actions to further differentiate the value and experience we offer associates and customers, continued year-over-year price declines, and improved stability in vehicle valuations,” said Bill Nash, president and chief executive officer.
Interestingly, the stock is up 15.7% since reporting and currently trades at $86.19.
Is now the time to buy CarMax? Access our full analysis of the earnings results here, it’s free.
Best Q3: Camping World (NYSE:CWH)
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Camping World reported revenues of $1.72 billion, flat year on year, outperforming analysts’ expectations by 5.4%. The business had a stunning quarter with an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ EBITDA estimates.
Camping World achieved the biggest analyst estimates beat among its peers. The market seems content with the results as the stock is up 3.4% since reporting. It currently trades at $22.13.
Is now the time to buy Camping World? Access our full analysis of the earnings results here, it’s free.
Lithia (NYSE:LAD)
With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Lithia reported revenues of $9.22 billion, up 11.4% year on year, falling short of analysts’ expectations by 2.5%. Still, its results were good as it locked in an impressive beat of analysts’ EBITDA estimates and a decent beat of analysts’ EPS estimates.
Lithia delivered the fastest revenue growth but had the weakest performance against analyst estimates in the group. Interestingly, the stock is up 23.3% since the results and currently trades at $375.82.
Read our full analysis of Lithia’s results here.
America's Car-Mart (NASDAQ:CRMT)
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
America's Car-Mart reported revenues of $347.3 million, down 3.6% year on year. This number surpassed analysts’ expectations by 0.8%. It was an exceptional quarter as it also recorded an impressive beat of analysts’ EPS estimates and a solid beat of analysts’ gross margin estimates.
America's Car-Mart had the slowest revenue growth among its peers. The stock is up 22.6% since reporting and currently trades at $56.02.
Read our full, actionable report on America's Car-Mart here, it’s free.
Market Update
As a result of the Fed's rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed's 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump's victory in the US Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain. Said differently, there's still much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 5 Quality Compounder Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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