CarMax Reports Q3 Profit, EPS Growth Expected at 6.6%

CarMax beats expectations with a Q3 profit of $0.81 per share. Analysts foresee a 6.6% EPS growth for the fiscal year ending February 2025, reflecting potential investor confidence.

Date: 15-02-2025

AI Rating: 7

**Earnings Per Share (EPS)**: CarMax reported a Q3 profit of $0.81 per share, which exceeded analyst expectations. This positive earnings surprise could enhance investor sentiment and lead to increased stock prices. Furthermore, analysts expect EPS to grow 6.6% year-over-year to $3.22 for the fiscal year ending in February 2025, indicating a promising future outlook for CarMax and potential for upward price movement.

**Revenue Growth**: The company reported a revenue increase of 1.2% to $6.2 billion, beating estimates and marking the first sales increase in over two years. This improvement signals a strengthening business performance and could positively affect stock prices as investors look for growth prospects in the company.

**Stock Performance**: While shares of CarMax have slightly underperformed relative to the broader market over the past 52 weeks, they managed an 8.2% year-to-date increase compared to the S&P 500's nearly 4% gain. The management’s mention of addressing affordability concerns through the sales of vehicles priced under $20,000 also highlights targeted efforts that could enhance customer interest and sales volume.

**Analyst Recommendations**: Among the 17 analysts covering CarMax, a “Moderate Buy” consensus rating suggests generally positive sentiment among analysts regarding future performance. Analysts’ upgrades, including RBC Capital raising CarMax’s price target to $103 after the earnings beat, further signify bullish expectations, potentially driving stock price appreciation.

Overall, the combination of beating EPS expectations, revenue growth, and favorable analyst sentiments indicates a strong foundation for stock performance moving forward.

Stocks: KMX