No. of Recommendations: 7
Carmax reports. 'We believe vehicle affordability challenges continued to impact our third quarter unit sales performance, as headwinds remain due to widespread inflationary pressures, climbing interest rates, and low consumer confidence.'Yes, this window was open on my desktop when I saw the downwards spike in the share quote this morning:
Shortage of used vehicles drags on CarMax profithttps://www.reuters.com/article/us-carmax-results-...That article was September 20, for Q2, so 3 short months later, for Q3, it's much the same story.
I'm sorry I was tied up with work this morning, or I would have posted something positive, before/during/after buying another 25% at about $51 before markets opened, since I thought and think the badness of the news is distinctly underwhelming. Shares are now back up to $56 or so, so I guess the market is coming around to my way of thinking.
Which is that, OK, used cars are hard to find, interest rates are high, so sales are down (24%, year over year) and earnings are de minimis (24c per share, down from $1.63 Q3 last year). But this too shall pass. In the meantime, the company has strong finances, and despite the awful revenue figure, they still eked out a small profit. I'm not delighted that they have suspended share repurchases as they save cash, at just the moment when a rational buyer should be buying, and they only bought back 30,000 shares (there are now 158.02, down from 158.05 million last quarter). In retrospect, that's probably better, since the share price is lower now, and I can compensate for the lack of repurchases by buying more myself.
Sorry to contradict but I think the price, even at $56, is pretty compelling. They are at just under 16 times their earnings for the last 4 quarters ($3.58), and while the next few quarters might be similarly awful, the business is sound and will recover as soon as the economy normalizes. I would say that if you liked them at $60 yesterday, they are an even better deal today at $56. Of course, that doesn't mean you might not get an even better price, especially if the general economic slowdown drags on long enough, but I think they are at a good price for a more than satisfactory long term return.
DTB
By the way, housekeeping, how do you type text into a text box and do formating that way? Using html code (like < i > without the spaces) still works, but I've heard people mentioning some improvement that I'm not seeing?
And speaking of the site, what is shrewdom meant to mean, anyways? Is it something about shrews (an old-fashioned word for a nagging, disagreeable person, generally of the fair sex) or is it about being 'shrewd'? Or something else?
