CarMax (KMX) Reports Next Week: Wall Street Expects Earnings Growth

Core Viewpoint - CarMax (KMX) is anticipated to report a year-over-year increase in earnings despite a decline in revenues for the quarter ending November 2024, with the consensus outlook indicating a significant factor that could influence its stock price in the near term [1][2]. Earnings Expectations - The earnings report is scheduled for release on December 19, 2024, and could lead to a stock price increase if the reported figures exceed expectations; conversely, a miss could result in a decline [2]. - The consensus estimate for quarterly earnings is projected at $0.61 per share, reflecting a year-over-year increase of 17.3% [3]. - Revenues are expected to be $5.99 billion, representing a decrease of 2.6% compared to the same quarter last year [4]. Estimate Revisions - The consensus EPS estimate has been revised 2.25% higher in the last 30 days, indicating a reassessment by analysts regarding the company's earnings prospects [5]. - The Zacks Earnings ESP model suggests that the Most Accurate Estimate is lower than the consensus estimate, resulting in an Earnings ESP of -2.17%, indicating a bearish outlook from analysts [11][12]. Earnings Surprise Prediction - The Zacks Earnings ESP compares the Most Accurate Estimate to the Zacks Consensus Estimate, with a positive Earnings ESP being a strong predictor of an earnings beat, particularly when combined with a favorable Zacks Rank [7][9]. - CarMax currently holds a Zacks Rank of 2, which complicates the prediction of an earnings beat given the negative Earnings ESP [12]. Historical Performance - In the last reported quarter, CarMax was expected to post earnings of $0.86 per share but delivered $0.85, resulting in a surprise of -1.16% [13]. - Over the past four quarters, CarMax has only beaten consensus EPS estimates once [14]. Conclusion - While CarMax does not appear to be a strong candidate for an earnings beat, investors should consider other factors when making decisions regarding the stock ahead of the earnings release [17].