Why CarMax, Inc (NYSE: KMX) stock is under pressure

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CarMax, Inc (NYSE: KMX) stock fell over 1.2% on 25th September, 2019 (As of 10:29 am GMT-4 ; Source: Google finance) on average performance by the group.

For the second quarter of FY 20, KMX had achieved a 3.2% rise in used unit comps and a 6.2% growth in total used unit sold. The retail performance is on back of strong conversion and continued growth in web traffic. In the second quarter, the website traffic grew 16% year-over-year, which was up slightly from the first quarter. On average, the company saw more than 25 million visits per month. Gross profit per used unit for the quarter was consistent with prior year at $2,183. The company has posted higher wholesale units, with volume up 4.7% compared to the same quarter a year ago, which is primarily due to an increase in buy rate. Gross profit per wholesale unit was $928, which is a rise of 1% compared to last year. As a percentage of sales, zero to four year old vehicles have grown to 78% versus 77% a year ago. Total SUVs and trucks accounted for about 47% of the company’s sales, up from 44% last year.

Moreover, the company had posted 6.6% rise in the total gross profit. Compared with last year’s second quarter, CAF income have risen 4.1% to $114.1 million, due to a 7.8% increase in average managed receivables, slightly offset by a higher loan loss provision.

KMX in the second quarter of FY 20 has reported the adjusted earnings per share of $1.40, beating the analysts’ estimates for the adjusted earnings per share of $1.33, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 9.1 percent to $5,201 million in the second quarter of FY 20, beating the analysts’ estimates for revenue of $5,026 million. The sales in the used-vehicle segment that contribute to bulk of CarMax’s revenue stood at $4,346.3 million, which beaten the consensus estimate of $4,300 million. Wholesale vehicle revenues stood at $678.3 million also beaten the consensus estimate of $634 million.

Additionally, during the quarter, KMX has repurchased about 1.5 million shares for $128 million and the company has $1.8 billion remaining in current authorizations from the Board.

During the second quarter, the company had opened three stores, one in a new market, Lubbock, Texas; and two in existing markets San Francisco, California and Phoenix, Arizona. The company also expects to open 13 more stores over the next 12 months.

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