RBC Capital Markets analyst Steven Shemesh reiterated an Outperform rating on the shares of CarMax Inc
CarMax will report Q1 results before the market opens on June 23, 2023.
Based on recent securitization pricing and continued deterioration in the credit markets (increased delinquency rates), the analyst sees potential for KMX's net interest margin to be squeezed beyond what consensus currently assumes for Q1.
For the quarter to be reported, the analyst sees some variability vs. consensus across key KPIs but thinks consensus EPS of $0.78 is in the right ballpark.
Overall, KMX is well-positioned to gain a share of the used car market long-term (especially after a potential recession), but expect results to remain "noisy" near-term.
The analyst notes while used vehicle prices are ~13% off Jan 2022 highs, they're still ~48% above 2019 levels. The used prices need to come down at least another 5-10% to drive unit stabilization.
Shemesh expects Q1 used vehicle ASP to be down between 4%-6%, slightly better than the consensus of a 7.1% decrease.
Price Action: KMX shares are trading lower by 1.28% to $78.61 on the last check Tuesday.
