Mission accomplished CarMax!The fourth-quarter's numbers show those efforts bearing fruit. Gross margin jumped to 15.7% for the quarter, from 12.6% in the year-ago period and from 12.8% in the third quarter, and CarMax returned to operating profitability. Bottom line, the company ended the quarter with a 2.6% net profit margin ($0.17 per share) and about 0.8% net margin ($0.27) for the year.
Meanwhile, the company generated its first actual free cash flow in seven years. Thanks to inventory liquidation and cuts in capital spending, CarMax pushed through $78.9 million in free cash flow for the year. Looking forward, with the capital budget slashed to just $20 million for fiscal 2010, I think it's safe to say we'll see far more cash roll in this year as well.
So CarMax is doing better than the people who build the cars it sells. But is relative outperformance reason enough to own the stock? Need some help answering that question? Take our Motley Fool Inside Value newsletter out for a free test-drive and get the team's latest thoughts on CarMax, which they first recommended to subscribers in 2008.
Meanwhile, the company generated its first actual free cash flow in seven years. Thanks to inventory liquidation and cuts in capital spending, CarMax pushed through $78.9 million in free cash flow for the year. Looking forward, with the capital budget slashed to just $20 million for fiscal 2010, I think it's safe to say we'll see far more cash roll in this year as well.
So CarMax is doing better than the people who build the cars it sells. But is relative outperformance reason enough to own the stock? Need some help answering that question? Take our Motley Fool Inside Value newsletter out for a free test-drive and get the team's latest thoughts on CarMax, which they first recommended to subscribers in 2008.
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ReplyDeleteHave a great day! ^^