CarMax Stock Plunges 19.7% on Missed Earnings, Weak Demand
CarMax, the used car retailer, has reported a tough second quarter. Its stock plummeted 19.7% after earnings missed expectations. The company's market capitalization stands at approximately $6.9 billion.
CarMax's sales dropped 6% year over year, reaching $6.6 billion, which fell short of analysts' $7 billion projection. Profits plunged 25% during the same period, contrary to anticipated growth. The company's CEO, Bill Nash, acknowledged the quarter was 'challenging'.
CarMax bought 2.4% fewer cars for resale, suggesting a weakening overall car demand. The company is now planning to cut selling, general, and administrative spending by $150 million over the next 18 months. Despite these setbacks, analysts forecast CarMax's long-term earnings growth at 16%, indicating the stock could still be a good value, trading at 13.2 times earnings.
CarMax's current market capitalization is approximately $6.84 billion. Although the company's recent performance was disappointing, with sales and profits declining, analysts remain optimistic about its long-term prospects. The company's stock price reacted negatively to the news, but it is still considered relatively cheap based on earnings.
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