As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the vehicle retailer industry, including CarMax (NYSE:KMX) and its peers.
Buying a vehicle is a big decision and usually the second-largest purchase behind a home for many people, so retailers that sell new and used cars try to offer selection, convenience, and customer service to shoppers. While there is online competition, especially for research and discovery, the vehicle sales market is still very fragmented and localized given the magnitude of the purchase and the logistical costs associated with moving cars over long distances. At the end of the day, a large swath of the population relies on cars to get from point A to point B, and vehicle sellers are acutely aware of this need.
The 4 vehicle retailer stocks we track reported a mixed Q2. As a group, revenues missed analysts’ consensus estimates by 0.5%.
While some vehicle retailer stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.1% since the latest earnings results.
CarMax (NYSE:KMX)
Known for its transparent, customer-centric approach and wide selection of vehicles, Carmax (NYSE:KMX) is the largest automotive retailer in the United States.
CarMax reported revenues of $7.55 billion, up 6.1% year on year. This print was in line with analysts’ expectations, and overall, it was a very strong quarter for the company with an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.
“We delivered our fourth consecutive quarter of positive retail comps and double-digit year-over-year earnings per share growth. These results highlight the strength of our earnings growth model, which is underpinned by our best-in-class omni-channel experience, the diversity of our business, and our sharp focus on execution,” said Bill Nash, president and chief executive officer.
Unsurprisingly, the stock is down 4.9% since reporting and currently trades at $61.20.
Is now the time to buy CarMax? Access our full analysis of the earnings results here, it’s free.
Best Q2: Camping World (NYSE:CWH)
Founded in 1966 as a single recreational vehicle (RV) dealership, Camping World (NYSE:CWH) still sells RVs along with boats and general merchandise for outdoor activities.
Camping World reported revenues of $1.98 billion, up 9.4% year on year, outperforming analysts’ expectations by 5.2%. The business had a very strong quarter with a solid beat of analysts’ EBITDA estimates.
Camping World pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems content with the results as the stock is up 1.2% since reporting. It currently trades at $17.85.
Is now the time to buy Camping World? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: America's Car-Mart (NASDAQ:CRMT)
With a strong presence in the Southern and Central US, America’s Car-Mart (NASDAQ:CRMT) sells used cars to budget-conscious consumers.
America's Car-Mart reported revenues of $341.3 million, down 1.5% year on year, falling short of analysts’ expectations by 5%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ EPS estimates.
America's Car-Mart delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 17.1% since the results and currently trades at $36.90.
Read our full analysis of America's Car-Mart’s results here.
Lithia (NYSE:LAD)
With a strong presence in the Western US, Lithia Motors (NYSE:LAD) sells a wide range of vehicles, including new and used cars, trucks, SUVs, and luxury vehicles from various manufacturers.
Lithia reported revenues of $9.58 billion, up 3.8% year on year. This result missed analysts’ expectations by 2%. Zooming out, it was actually a strong quarter as it logged an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ gross margin estimates.
The stock is up 12.3% since reporting and currently trades at $344.86.
Read our full, actionable report on Lithia here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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