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CarMax Stock Active After Q3 Earnings Beat Powered By Soaring Used Car Prices

Record increases in used car prices, triggered by pandemic shortages in new vehicles, helped CarMax post stronger-than-expected third quarter earnings.

CarMax Inc.  (KMX) - Get CarMax, Inc. Report shares were active Wednesday after the vehicle-buying website posted stronger-than-expected third quarter earnings amid a record surge in used car prices triggered by the Covid pandemic. 

CarMax said earnings for the three months ending in November were pegged at $1.63 per share, a 15% increase from the same period last year and 17 cents ahead of the Street consensus forecast. Group revenues, CarMax said, surged 64.5% to $8.5 billion, smashing analysts' estimates of a $7.5 billion tally. 

Retail vehicle sales were up 16.9% to 227,424 units, the company said, whole Wholesale surged 48.5% to 187,630 units.

“Our solid execution, customer-centric omni-channel strategy, and macro factors are driving strong performance across our diversified businesses,” said CEO Bill Nash. “Our top line momentum continued into this quarter and we achieved record levels of third quarter unit sales in both retail and wholesale, generating all-time record revenues. We also bought more cars from customers than ever before."

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"We are excited about the opportunities ahead of us and believe that by delivering the most customer-centric experience in the industry, we will enable sustainable growth and create meaningful long-term shareholder value,” he added.

CarMax shares were marked 4.2% lower in early trading to change hands at $131.90 each, a move that would trim the stock's six-month gain to around 12%. 

Used car prices have been one of the key components of this year's inflation surge, according to data from the Commerce Department, with its measure of collective prices rising 39.8% from March 2020 to October 2021 as carmakers such as Ford  (F) - Get Ford Motor Company Report and General Motors  (GM) - Get General Motors Company Report were unable to produce new cars owing to pandemic restrictions, and then fell shy or prior targets amid supply chain disruptions in parts and semiconductors.

The Manheim U.S. Used Vehicle Value Index, a key sector metric for pricing trends, is up 48.9% from December 2020, and hit a record high of 204.8 in October, pushing the value of each unit sale for CarMax into a higher revenue total.