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CarMax’s fiscal 2022 second-quarter results saw record quarterly revenue of about $8 billion, a 48.7% year-over-year increase and a 53.6% rise from the second quarter of fiscal 2020. However, diluted EPS of $1.72 missed the Refinitiv consensus of $1.90 and the stock fell over 10% during Sept. 30 trading. We are raising our fair value estimate to $133 per share from $129, mostly from the time value of money.
CarMax sells, finances, and services used and new cars through a chain of over 220 used retail stores at the end of fiscal 2021 plus one new-vehicle store. It was formed in 1993 as a unit of Circuit City and spun off into an independent company in late 2002. Used-vehicle sales account for about 83% of revenue and wholesale about 14%, with the remaining portion composed of extended service plans and repair. In fiscal 2021, the company retailed and wholesaled 751,862 and 426,268 used vehicles, respectively. CarMax is the largest used-vehicle retailer in the U.S. but still estimates that it has only about 3.5% U.S. market share of vehicles 0-10 years old. It seeks over 5% share by the end of calendar 2025. CarMax is based in Richmond, Virginia.
