CarMax (KMX, $92.45) reports fiscal Q1 earnings' pandemic plunge

On Friday, CarMax  reported fiscal first-quarter earnings that saw a steep plunge from the year-ago period, on shutdown due to the covid-19 crisis.

The retail used-cars company’ net earnings fell to $5 million, or 3 cents a share, from $266.7 million, or $1.59 a share in the year-ago period. 

The EPS was also lower than the 4 cents expected by analysts polled by FactSet.

Sales declined -40% year-over-year to $3.23 billion, compared to analysts’ expectation of $2.7 billion. Comparable-store used unit sales dropped -42% during the quarter.

The overall result also included a $122 million in loan-loss provisions for CarMax’s financing unit. Revenue in its financing business fell to $51 million from $116 million.

CarMax CEO Bill Nash said, “We accomplished a lot this quarter, despite the challenges the pandemic posed,” Nash noted that more than 80% of the days in the quarter “were negatively impacted by a mix of store closures and limited operations.” 

However, Nash feels sanguine about the sales and customer foot traffic in late May and into June, particularly among used-car sales, and online.

Tickeron's AI-powered scorecard rates CarMax a STRONG BUY.

KMX enters an Uptrend as Momentum Indicator exceeded the 0 level on June 12, 2020

This indicator signals that KMX's price has momentum to move higher, since its current price moved above its price 14 days ago. Traders may consider buying the ticker or exploring call options. In 50 of 76 cases where KMX's Momentum Indicator exceeded 0, its price rose further within the subsequent month. The odds of a continued Uptrend are 66%

Current price $92.45 crossed the support line at $93.17 and is trading between $93.17 support and $88.79 support lines. Throughout the month of 05/18/20 - 06/18/20, the price experienced a +23% Uptrend. During the week of 06/11/20 - 06/18/20, the stock enjoyed a +12% Uptrend growth.

Technical Analysis (Indicators)

Bullish Trend Analysis

Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where KMX advanced for three days, in 190 of 307 cases, the price rose further within the following month. The odds of a continued Uptrend are 62%.

The Aroon Indicator entered an Uptrend today. In 169 of 268 similar cases where KMX Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are 63%.

Bearish Trend Analysis

The RSI Indicator appears to be shifting from an Uptrend to a Downtrend. In 22 of 38 cases where KMX's RSI indicator exited the overbought zone, the price fell further within the following month. The odds of a continued Downtrend are 58%.

The Stochastic Indicator has been in the overbought zone for 1 day. Expect a price pull-back in the near future.

The Moving Average Convergence Divergence (MACD) crossed below the signal line. In 26 of 41 cases where KMX's MACD histogram became negative, the price fell further within the following month. The odds of a continued Downtrend are 63%.

The higher Bollinger Band was broken -- a price fall is expected as the ticker heads toward the middle band, which invites the trader to consider selling or shorting the ticker, or exploring put options. In 20 of 40 cases where KMX's price broke its higher Bollinger Band, its price dropped further during the following month. The odds of a continued Downtrend are 50%.

Fundamental Analysis (Ratings)

Tickeron has a positive outlook on this ticker and predicts a further increase by more than 4.00% within the next month with a likelihood of 58%. During the last month, the daily ratio of advancing to declining volumes was 1.56 to 1.

The Tickeron Price Growth Rating for this company is 2 (best 1 - 100 worst), indicating outstanding price growth. KMX’s price grows at a higher rate over the last 12 months as compared to S&P 500 index constituents.

The Tickeron PE Growth Rating for this company is 39 (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.

The Tickeron SMR rating for this company is 51 (best 1 - 100 worst), indicating slightly weaker than average sales and a marginally profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.

The Tickeron Profit vs. Risk Rating rating for this company is 56 (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 82, placing this stock slightly better than average.

The Tickeron Valuation Rating of 70 (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (4.24) is normal, around the industry mean (13.77). P/E Ratio (18.39) is within average values for comparable stocks, (49.38). Projected Growth (PEG Ratio) (1.41) is also within normal values, averaging (16.00). Dividend Yield (0.00) settles around the average of (1.23) among similar stocks. P/S Ratio (0.71) is also within normal values, averaging (0.61).