Carmax is the largest used-car retailer in America. The company services, finances, and sells used and new cars through its network of 220 stores throughout the US. While the auto industry experienced significant disruptions in production and logistics due to the pandemic-induced lockdowns and government guidelines, the sector seems to be turning a tide. During the past few months, demand for automobiles has seen a resurgence. Auto sales have rebounded as the lockdowns have been easing and more customers are stepping out of their homes.
Carmax’s Q22021 beat analyst estimates
The uptick in the auto industry is evident in the numbers reported by Carmax for its second quarter of fiscal 2021. The earnings were reported on 24th September 2020. Revenues were up 3.3% on a year-on-year basis to $5.37 billion. Analysts had estimated revenues to come around $5.21 billion. The earnings per share were $1.79, a growth of 27.9% over the earnings per share reported in the same quarter last year. Analysts, meanwhile, had estimated earnings per share to be around $1.03. So, both revenue and earnings comfortably beat analyst estimates and registered respectable growth rates amidst a pandemic-led economic downturn.
Financial performance of auto stocks 2020
Carmax’s stock closed at $93.08 on 29th September 2020, down 12.95% over the past month and up 4% for the year 2020. On a longer-term basis, the 5-year return of Carmax’s stock is 55%. Carvana’s stock closed at $226.04 on 29th September 2020, up 4.66% for the past month, and up 133% for the year 2020. The online used car retailer clearly has leveraged the online-element of its business model when people have been compelled to stay at home. On a longer-term basis, the 5-year return of Carvana’s stock is 1936%. Auto Nation’s stock closed at $52.04 on 29th September 2020, down 8.48% for the past month, and up 6.38% for the year 2020. On a 5-year basis, Auto Nation’s stock is in the red.
So, Carvana is clearly among the top auto related stocks based on price performance. However, Carmax’s dominant position in the used car market and its recent digital initiatives place it quite favorably as well.