(Update: This corrects an earlier version that misstated analysts' consensus estimates for CarMax's first-quarter earnings.)

CarMax

(KMX) - Get Report

shares shot higher Friday after the company reported earnings that handily beat Wall Street targets, even as its business continued to lag compared to a year ago.

The stock was trading Friday afternoon at $14.95, up $1.83, or 14%, on more than double the average volume.

CarMax said its first-quarter revenue dropped 17% to $1.83 billion and that its profit slipped 3% to $28.7 million. But on a per-share basis, and excluding charges to write down the value of bad car loans made in earlier quarters, the company's bottom line amounted to 22 cents, well ahead of analysts' consensus estimates of a 4-cent profit.

The Richmond, Va.-based chain of used-car dealers attributed the upside surprise to "sales execution." The company also slashed costs by 11% through layoffs and a reduced advertising budget.

In its pre-market press release, CarMax said that while the number of people coming to the company's lots continued to decline compared with a year ago, customer traffic improved sequentially from the fourth quarter. That, evidently, gave spirit to investors, who have been bid CarMax stock up 60% since January.

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