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CarMax Fiscal Q1 Results Positive, but Improvement Must Continue, RBC Says
CarMax's (KMX) fiscal Q1 results were largely positive, and customer response has been encouraging, but it is important to see continued improvement beyond Q1, which may have benefited from one-time higher tax refunds, RBC Capital Markets said Wednesday in a note.CarMax's new CEO Keith Barr introduced a new growth strategy around four strategic pillars, including a great vehicle offering, easy experience for the customer, adding value on each transaction, and a lean cost structure, the brokerage said.Management said the sequential acceleration in fiscal Q1 retail used unit comps was driven by more competitive vehicle pricing, an increase in strong ROI acquisition marketing, and progress across its four strategic pillars, according to the note.For fiscal Q2, RBC raised its retail comp unit estimate to 3% from 1%, total company net sales estimate to 1.9% from a prior forecast of a 0.2% decline, and adjusted EPS estimate to $0.81 from $0.69.For fiscal 2027 and 2028, the brokerage now models retail comp units at 2.1% and 1.7%, total company net sales at 3.1% and 2.8%, and adjusted EPS at $2.62 and $2.98, respectively.RBC kept a sector perform rating on CarMax and raised the price target to $45 from $41.Price: $49.42, Change: $+1.99, Percent Change: +4.20%
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