Time to Buy CVNA Stock Pre-Q4 Earnings? Key Things to Note

Core Viewpoint - Carvana is expected to report its fourth-quarter 2024 results, with earnings estimated at 24 cents per share and revenues at $3.33 billion, reflecting a year-over-year revenue increase of 37.2% [1][2]. Financial Performance - The earnings estimate for Q4 2024 has decreased by one cent over the past month, while the company had a loss of $1 per share in the same quarter last year [2]. - For 2025, the revenue estimate is $16.24 billion, indicating a 20.8% year-over-year increase, and the EPS estimate is $2.85, suggesting a significant increase of 123% [4]. Sales and Growth - Carvana's used vehicle retail units sold have shown growth for the first time since June 2022, with over 100,000 cars sold in the second and third quarters of 2024, making it the second-largest used car retailer in the U.S. [6]. - The company anticipates a 47% year-over-year increase in retail units sold for Q4 2024, projecting sales of 112,021 vehicles [6]. Operational Efficiency - Adjusted EBITDA for Q4 2024 is forecasted to increase by 493% year-over-year to $356 million, driven by improved operational efficiency and cost-cutting measures [7]. - The company has successfully reduced SG&A expenses through staffing adjustments, advertising cuts, and inventory management, which are expected to enhance adjusted EBITDA margins [7]. Market Position and Valuation - Year-to-date, Carvana's shares have risen by 40%, outperforming competitors like CarMax and the broader auto industry as well as the S&P 500 [8]. - The stock is currently trading at a forward 12-month sales multiple of 3.55, which is higher than both the industry average and its own five-year median [11]. Strategic Initiatives - Carvana's shift from aggressive growth to operational efficiency has been pivotal, focusing on achieving positive adjusted EBITDA and increasing EBITDA per unit [13]. - A significant deal with Ally Financial to sell up to $4 billion in auto loan receivables has helped alleviate concerns regarding the company's financial stability [14]. Market Share and Expansion Potential - Despite being the second-largest used car retailer in the U.S., Carvana holds only a 1% share of the fragmented automotive retail market, indicating substantial growth potential as online car buying becomes more popular [15].