CVNA - Why Carvana Followed CarMax Shares Today
2023-04-11 11:24:38 ET
Shares of used car dealers CarMax (NYSE: KMX) and Carvana (NYSE: CVNA) are higher by 8.3% and 11.9%, respectively, as of 11:03 a.m. ET Tuesday following an impressive earnings beat from one of the two names. Investors are presuming the same good fortune is being experienced by the other.
CarMax topped analysts' earnings estimates of only $0.24 per share for the three-month stretch ending in February with its actual per-share profit of $0.44. Cost-cutting and surprisingly firm prices for used automobiles overcame the slightest of misses of revenue expectations. The same tailwind bodes well for rival Carvana.
The earnings beat, however, is a dubious victory. CarMax's revenue slumped more than 25% during its fiscal fourth quarter, with unit sales to retail customers falling 12.6% year over year. Wholesale unit sales slipped 19.3%. Although up for the full year, average retail selling prices were also down 9.3% year over year for the quarter in question; the average selling price of wholesale vehicles fell nearly 28% during the fourth quarter. Per-share profits themselves fell from the year-ago comparison of $0.98 on a 25.6% setback in sales.
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Why Carvana Followed CarMax Shares Today