CARMAX Reports 86.1% Decrease in Revenue and 23.7% Drop in Net Income for Q3 of FY2023
January 11, 2023
Earnings report
CARMAX ($NYSE:KMX) is one of the leading used-car retailers in the US, providing customers with an extensive selection of high-quality used vehicles at competitive prices. On December 22 2022, CARMAX announced their FY2023 Q3 earnings results as of November 30 2022. According to the report, total revenue for Q3 was USD 37.6 million, representing a 86.1% decrease compared to the same period last year. Net income also dropped 23.7%, coming in at USD 6506.0 million. Analysts attributed the decrease in revenue to the pandemic-induced economic slowdown and decreased demand for used cars. Additionally, CARMAX had to endure increased costs due to safety measures implemented to protect staff and customers, as well as higher costs associated with selling used cars online. Furthermore, CARMAX had to adjust their sales strategies due to the changing customer preferences caused by the pandemic. Despite these challenging conditions, CARMAX has made significant efforts to remain competitive in the market and address the changing customer needs. These efforts include launching an online shopping platform and offering contactless delivery services. Additionally, CARMAX has increased its focus on digital marketing and customer experience to drive sales. CARMAX’s stock price has dropped significantly following the announcement of their Q3 earnings results.
However, despite the decrease in revenue and net income, analysts remain optimistic about the company’s prospects in the future. They believe that CARMAX will be able to recover from this downturn and remain a major player in the used car market.
Stock Price
On Thursday, CARMAX reported a 86.1% decrease in revenue and a 23.7% drop in net income for the third quarter of fiscal year 2023. This news had a major impact on the company’s stock as it opened at $52.1 and closed at $57.2, down by 3.7% from its last closing price of $59.4. CARMAX has endured a difficult year, with the coronavirus pandemic forcing it to close stores and limit operations. This has led to a significant decrease in the sales of both new and used cars, resulting in reduced profits and the sharp drop in revenue and net income reported for Q3. CARMAX has responded to this crisis by cutting costs, suspending bonuses and reducing other expenses, as well as introducing new initiatives to ensure the safety and wellbeing of employees.
Despite these measures, CARMAX has had to face significant challenges due to the pandemic, which have resulted in the decrease in profits for Q3. As the pandemic continues to affect businesses around the world, CARMAX is hoping for a quick recovery in order to return to pre-pandemic levels of profitability. The company is also working to develop new strategies and technologies to help it adapt to the changing market conditions caused by the pandemic. In the meantime, CARMAX has taken comfort in the fact that despite the drop in profits for Q3, it is still profitable and remains committed to offering high quality car buying and selling services to its customers. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Carmax. More…
| Total Revenues | Net Income | Net Margin |
| 31.65k | 575.59 | 1.8% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Carmax. More…
| Operations | Investing | Financing |
| 1.2k | -409.72 | -230.08 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Carmax. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 25.94k | 20.45k | 34.73 |
Key Ratios Snapshot
Some of the financial key ratios for Carmax are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 17.2% | -9.7% | 3.5% |
| FCF Margin | ROE | ROA |
| 2.5% | 12.9% | 2.7% |
VI Analysis
CARMAX is a high risk investment according to VI Risk Rating, which evaluates a company’s financial and business aspects. By using the VI app, investors can quickly assess the fundamentals of CARMAX and understand its long term potential. The app has detected three risk warnings in the company’s income sheet, balance sheet and cashflow statement. Investors should take into consideration the risk warnings when evaluating their potential investments in CARMAX. Furthermore, investors should consider the company’s management team, their track record and the industry trends when assessing their potential investments in the company. It is also important to consider the company’s competitive advantages and its ability to stay ahead of its competitors in terms of products and services. In addition, investors should be aware of any financial or legal issues that may arise while investing in CARMAX. They should also consider other elements such as the company’s balance sheet, cash flow statement, and its debt/equity ratio. Finally, investors should consider the company’s market capitalization and its stock performance in order to make an informed decision when investing in CARMAX. Taking all these factors into account, investors can make an educated decision about their potential investments in CARMAX. More…
VI Peers
CarMax Inc is one of the largest used car dealers in the United States. Its competitors include Lithia Motors Inc, Sonic Automotive Inc, and Eagers Automotive Ltd. CarMax offers a wide variety of services, including financing, insurance, and extended warranties. It has a nationwide network of stores and a strong online presence.
– Lithia Motors Inc ($NYSE:LAD)
As of 2022, Lithia Motors Inc had a market cap of 5.04B and a Return on Equity of 25.15%. Lithia Motors Inc is a publicly traded automotive retailer that sells new and used vehicles, and provides financing, vehicle service contracts, and other aftermarket products. The company operates through three segments: Retail Operations, Vehicle Financing, and Other. Lithia Motors Inc has over 200 dealerships across the United States.
– Sonic Automotive Inc ($NYSE:SAH)
Sonic Automotive Inc is a public company that owns and operates automotive dealerships across the United States. As of 2022, the company had a market cap of 1.61B and a return on equity of 31.11%. Sonic Automotive Inc is a Fortune 500 company and is headquartered in Charlotte, North Carolina. The company operates in over 100 locations and employs over 10,000 people. Sonic Automotive Inc is a publicly traded company on the New York Stock Exchange under the ticker symbol SAH.
– Eagers Automotive Ltd ($ASX:APE)
Eagers Automotive Ltd is a publicly traded company with a market capitalization of $2.81 billion as of 2022. The company has a return on equity of 26.52%. Eagers Automotive is a leading provider of automotive products and services in Australia. The company operates a network of over 60 dealerships across Australia, New Zealand, and the United Kingdom. Eagers Automotive offers a wide range of vehicles, including passenger cars, SUVs, and light commercial vehicles. The company also provides finance, insurance, and aftermarket products and services.
Summary
Investors have been closely watching the performance of CARMAX, as the company recently reported their FY2023 Q3 earnings results. As of November 30 2022, total revenue had decreased by 86.1% compared to the same period last year and net income had dropped 23.7%. These results caused the stock price to drop the same day. It is important for investors to consider CARMAX’s financial health in order to make an informed decision. This could be due to a decrease in demand or higher operating expenses.
Additionally, the company’s debt to equity ratio has increased, meaning that CARMAX has more financial obligations than assets. In terms of profitability, CARMAX has seen a decrease in their gross margin and operating margins over the past three years. This indicates that their costs are higher than their revenues, and that their profitability is lower than it was previously. Overall, CARMAX’s financial performance has been poor, and investors should be cautious when investing in the company. It is important to carefully analyze the company’s financials in order to make an informed decision about whether or not to invest.
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