CarMax (KNX) released its third quarter financial results before the opening bell on Friday. Here’s what the results mean for mutual fund investors.
Inside the Results
Earnings
The company posted earnings of $130 million, or 60 cents per share, up from $106.5 million, or 47 cents per share, a year ago. Analysts expected to see EPS of 54 cents.
Revenue
Revenue rose 16% to $3.41 billion. Analysts expected to see revenue of $3.26 billion.
Leader in Used Car Sales
CarMax is the leader among used car companies. The company had a huge run in 2013 and into 2014, which was partially due to low interest rates. As we head into 2015, consumer spending could see a bump higher as a result of low energy prices. This could turn into another catalyst for shares of CarMax. For mutual fund managers, the risk is going to be whether the stock is worth buying further at these valuation levels. The stock is currently trading at 25x 2015 EPS estimates.
Mutual Funds to Watch
The mutual funds below may be a good option for investors seeking exposure to KMX. The three funds listed currently hold the largest stakes in the company.
| Symbol | Mutual Fund | Stake |
|---|---|---|
| NYVTX | Davis NY Venture | 3.58% |
| RPMGX | T. Rowe Price Mid-Cap Growth | 3.48% |
| PRGFX | T. Rowe Price Growth Stock | 3.15% |
The Bottom Line
The funds above offer investors exposure to KMX while remaining diversified. Investors interested in KMX may also be interested in AutoNation (AN).
Shares of KMX are up 41% YTD.