Investors overlook $1.31 EPS and $8.01 billion revenue as gross profit per vehicle drops $230 year over year.
CarMax Inc (KMX) shares fell over 6% as margin compression and credit risks outweighed stronger-than-expected earnings. The company reported adjusted EPS of $1.31, surpassing estimates of $0.95, while revenue rose 6.2% to $8.01 billion, above the $7.4 billion consensus.
Gross profit per retail used vehicle declined $230 to $2,177, reflecting pricing strategies to boost volume. Wholesale unit sales grew 8.4%, but comparable-store used-vehicle sales dipped 0.8%. CarMax Auto Finance income fell 1% to $140.2 million, with delinquency concerns rising.
Investors focused on sustained margin pressure and higher exposure to lower-tier borrowers, overshadowing the earnings beat.