With the valuation that used-car superstore operator CarMax (NYSE:KMX) sports, high-octane growth is a must. Fortunately, the company is delivering, though the immediate reaction to Thursday's earnings report suggests that once again investors built their expectations to a level that would be almost impossible to please.
A Full Throttle Fourth Quarter
Just as the company did in the November quarter, CarMax delivered revenue growth of 23% for this fourth quarter. The details were a little different, though, as comp store growth trailed off just a bit. "Trailed off" is a very relative notion, though; comp store growth of 12% is nothing to apologize for, nor is the 14% growth in overall used unit sales.
Profitability was solid as well. Gross margin slipped a bit (only about 30 basis points) from last year, and improved slightly on a sequential basis. On a per-unit basis, gross profit increased by about 6%. The company delivered solid operating leverage, and operating income rose about 16%. Operating margin clearly lost a bit of steam, but not to a significant degree and some of that can be chalked up to accounting changes in the auto finance side of the business. (For more, see CarMax Suffers For Investors' Over-revved Expectations.)
Profitability was solid as well. Gross margin slipped a bit (only about 30 basis points) from last year, and improved slightly on a sequential basis. On a per-unit basis, gross profit increased by about 6%. The company delivered solid operating leverage, and operating income rose about 16%. Operating margin clearly lost a bit of steam, but not to a significant degree and some of that can be chalked up to accounting changes in the auto finance side of the business. (For more, see CarMax Suffers For Investors' Over-revved Expectations.)
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