Thursday's Market Minute: Autos And Outsourcing

CarMax (NYSE: KMX) reports its 1Q22 earnings Friday before the market open. CarMax is the largest used auto retailer in the U.S., with over 220 locations selling new, used, and wholesale vehicles. CarMax has beat EPS estimates for the last four consecutive quarters, with a beat of $0.03 per share last quarter. For this quarter, Zacks estimates EPS of $1.61, a 600% increase year-over-year, with an estimated revenue of $6.19B, almost 92% higher than 1Q21.

According to the National Automobile Dealers Association, the car shortage has pushed up the price of used cars by 12.5% between February 2020 and February 2021. The shortage stems from several factors, including increased consumer demand, with people fleeing the cities during the pandemic needing transportation; rental car companies trying to replenish their inventory of cars they disposed of during the pandemic; and a lack of new vehicles due to supply chain issues, including the chip shortage. Increased demand and higher ticket prices have positioned CarMax to do well during the pandemic. CarMax announced earlier in the month that it would hire 1,800 employees by the end of summer 2021 to handle the increase in demand. We’ll see if they can continue to beat for one more quarter.

Paychex (NASDAQ: PAYX) reports 4Q21 earnings Friday morning before the bell. Paychex is an outsourcing provider of payroll solutions, HR, benefits, retirement services, and insurance to over 680K small and medium-sized businesses in the U.S. and Europe. Zacks estimates EPS will be $0.67, representing an almost 10.0% increase over last year, and revenue is estimated at $980.6M, over 7.0% higher than last year. Paychex beat EPS expectations for the last 3 consecutive quarters, with a beat of $0.03 last quarter. They announced a 6% increase in their dividend to $0.66 per share back in April. Paychex hit a 52-week high on Friday, June 11, so will a strong report be enough to top that peak?

Image by Niek Verlaan from Pixabay