CarMax’s profit reached a new record due to increased used cars sales, beating analysts’ expectations.
At 11:07 a.m. in New York Stock Exchange composite trading, CarMax climbed 7.7% to $37.53 and its shares increased 9.8% to $38.24, the highest price since 1997, when it was the company’s initial public offering. CarMax, which is the largest US seller of used cars, has a current capitalization of $8.51 billion, the largest of all used car retailers in the States.
Richmond, Virginia-based CarMax, said that sales of used vehicles went up 16% to 105,815 units and that net income during the quarter ended November 30th increased to $94.7 million, which means 41 cents a share, from $82.1 million (36 cents) in 2011. Analysts expected a profit of 39 cents.
“The business model and the industry dynamics have aligned and the market seems to be recognizing that,” said Kevin Tynan, a senior analyst for Bloomberg Industries based in Skillman, New Jersey.”Used-car demand and prices continue to increase and margins on the used-car side are better than new-car.”
CarMax opened its first store in 1993, pioneering the used car superstore concept. As of December 6th, 2012, the company had 116 used car superstores in 58 markets around the world.