CarMax Inc., the largest U.S. seller of used cars, rose to a record price as increased vehicle sales drove quarterly profit that beat analysts’ estimates.
CarMax climbed 9 percent to $37.97 in trading in New York, the highest closing price since the company’s 1997 initial public offering. CarMax’s current market capitalization of $8.67 billion is the largest among U.S. used-car retailers.
Used-vehicle sales increased 16 percent to 105,815, Richmond, Virginia-based CarMax said today in a statement. Net income in the quarter ended Nov. 30 rose to $94.7 million, or 41 cents a share, from $82.1 million, or 36 cents, a year earlier. The average estimate of 14 analysts surveyed by Bloomberg was for a profit of 39 cents.
“The business model and the industry dynamics have aligned and the market seems to be recognizing that,” Kevin Tynan, a senior analyst for Bloomberg Industries based in Skillman, New Jersey, said in an e-mail. “Used-car demand and prices continue to increase and margins on the used-car side are better than new-car.”
Income from CarMax Auto Finance, the company’s lending unit, increased 16 percent to $72.5 million during the quarter, according to today’s statement.