Why CarMax (KMX) Stock Is Trading Up Today

Max Juang /
2023/12/21 11:00 am EST

What Happened:

Shares of used automotive vehicle retailer Carmax (NYSE:KMX) jumped 5.8% in the morning session after the company reported third quarter results that blew past analysts' EPS expectations due to a more efficient expense base that resulted from cost reduction efforts. Higher-than-expected operating margin and the resulting EPS beat stood out as positives in these results. However, its revenue missed analysts' expectations during the quarter. Zooming out, we know that expectations have been low for the used car industry, and CarMax reported better-than-feared results.

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What is the market telling us:

CarMax's shares are not very volatile than the market average and over the last year have had only 21 moves greater than 5%. The biggest move we wrote about over the last year was 3 months ago, when the stock dropped 9.7% on the news that the company reported second quarter revenue that narrowly exceeded Wall Street's expectations. However, earnings per share missed. Management cited persistent widespread pressures across the used car industry. Lastly, Carmax intends to resume share repurchases in the third quarter of the year (Q3'2023), noting that it has $2.45 billion remaining available for repurchase. Overall, it was a weaker quarter for the company.

CarMax is up 32.5% since the beginning of the year, and at $80.23 per share it is trading close to its 52-week high of $86.21 from June 2023. Investors who bought $1,000 worth of CarMax's shares 5 years ago would now be looking at an investment worth $1,362.

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