CarMax Stock Soars As Earnings Smash Estimates; Online Rival Carvana Sinks

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CarMax (KMX) crushed earnings views for its fiscal first quarter Friday on the back of actions to control costs. CarMax stock soared but online rival Carvana (CVNA) plunged.

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CarMax Earnings

The leading used-car retailer posted earnings of $1.44 per share on $7.687 billion revenue for the quarter ended May 31. Year over year, CarMax earnings fell nearly 8% and revenue dropped 17%.

Analysts had braced for CarMax earnings of 79 cents a share and revenue of $7.495 billion, FactSet shows.

CarMax’s retail used unit sales declined 9.6% from a year ago. Wholesale units retreated 13.6% vs. a year earlier. Comparable store used unit sales fell 11.4% from a year ago.

SG&A (selling, general and administrative) costs fell 14.8%, or $96.9 million, to $559.8 million, driven by proceeds from a legal settlement and active cost management, CarMax said in an earnings release.

“Our deliberate actions are driving improved trends in the business, despite the challenging macro environment,” CarMax CEO Bill Nash said in the release.

CarMax Stock, CVNA Stock

Shares of CarMax leapt 10% to 86.21 on the stock market today. KMX stock topped a 73.57 cup-with-handle buy point in May and is far extended.

Upstart rival Carvana tanked 16.1% Friday. CVNA stock has skyrocketed around 350% year to date amid an improving financial outlook.

On Wednesday, the Wall Street Journal reported a potential takeover bid for embattled auto, home and renters insurer Root (ROOT), at a big premium. But bidder Embedded Insurance hasn’t managed to negotiate a deal, the report said.

Carvana, an online used-car seller, invested in Root in 2021. The companies partnered to provide car insurance to Carvana customers.

ROOT stock sank 14.8% Friday after soaring Wednesday.

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