CarMax Posts Sharply Higher Profit, Boosting Shares
CarMax , the largest U.S. retailer of used cars, posted a stronger-than-expected quarterly profit and boosted its fiscal 2007 earnings outlook, giving its shares an upward jolt.
Net income in the third quarter rose 98% to $45.4 million, or 42 cents a share, from $22.9 million, or 22 cents a share, a year earlier. The quarter included 3 cents a share in stock-based compensation costs.
Analysts had expected 25 cents a share, according to Reuters Estimates.
CarMax's profit almost doubled due to strong Internet traffic, a demand for luxury vehicles and a rebound in SUV and truck sales.
Sales in the quarter rose 24% from last year to $1.77 billion, while sales in stores open at least a year increased 13%. Analysts had expected $1.63 billion.
CarMax said it now expects 2007 earnings of $1.75 to $1.85 a share, including stock-based compensation expenses. It also expects same-store, used-vehicle sales growth of 8% to 9%.
It previously said it expected earnings of $1.55 to $1.65 a share and same-store, used-vehicle sales growth of 6% to 8%.
"It is difficult to attribute our strong traffic flow to any single factor, as we believe a number of elements had a positive effect," Tom Folliard, CarMax's president and chief executive officer, said. "We believe one contributing factor was our increased Internet visibility resulting from recent improvements to carmax.com and the expansion of our Internet classified advertising."