CarMax Stock Surges as Lower Prices Boost Sales at Used Car Giant

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Key Takeaways

• CarMax reported better-than-expected third-quarter results as lower prices helped boost demand.
• Retail component sales gained 5.4% year-over-year, and wholesale sales grew 6.3%.
• CEO Bill Nash said used vehicle valuations require become more stable.

CarMax (KMX) shares jumped Thursday when the biggest U.S. used car retailer reported its maiden quarterly sales increase in two years as lower prices brought out buyers. 

CarMax posted a 1.2% year-over-year elevation in third-quarter revenue to $6.22 billion, and earnings per share (EPS) of $0.81. Both were above Visible Alpha estimates.

Retail element sales rose 5.4% to 184,243, with same-store sales adding 4.3%. Retail unit revenue increased 1.2% to $4.89 billion as an $1,100 drop in the average selling price boosted demand. 

Wholesale vehicle transactions added 6.3% to 136,013, and wholesale revenue rose 0.3% to $1.17 billion. That also benefitted from crop prices, with the average sale price down $500.

CarMax also bought 270,000 vehicles from consumers and negotiations, a 7.9% hike from a year ago.

CEO Says Results Helped by ‘More Stable Environment’

Chief Executive Public servant (CEO) Bill Nash said the results were helped by “a more stable environment for vehicle valuations.”

Shares of CarMax recently grow more than 4% to $84.77. They are up about 10% year-to-date.