CarMax profit, revenue rise above expectations

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CARMAX, second quarter profits and revenue came in much higher than expected. And the last time I checked the stock. It was down twelve percent. I was surprised by this because this was a really good quarter for Carmax I didn't see anything in their guidance to indicate that the next three to six months is going to be particularly perilous. Yeah I was also surprised they beat expectations revenue was up three point three, percent five, point three, seven, billion earnings were up percent last quarter they had implemented cost savings they had furloughed fifteen thousand workers, the CEO Bill. Nash Reduced Salary by fifty percent, they stopped new store openings like you said Chris this this quarter was really good for them. Their sales had bounced back by. Around June, we saw revenue growth, they're hiring seven, hundred, fifty people at their customer experience center they're planning to open stores. Again, the stock is up twenty one percent since the beginning of the year. So I don't know if it's more trying to temper expectations for the future, but it was a solid quarter for them. We've certainly seen that with other companies in other industries where. The come out with, results. They are somewhere on the spectrum of good to great but not. Off John Dropping perfect. And we see a little bit of a off just because you're to date the stock is doing well. I Dunno Carmax. I've the last vehicle. I bought was from Carmax. A couple of years ago had a very good experience. I would absolutely go back there again because I feel like they have. I don't want to say they have solved a pain point, but they have certainly made a pain point a lot less painful and I'm referring to the process of buying a car which for for most people, it's just trans. Actually we just want the car that we want and please don't make me go through the whole haggling Kabuki theatre thing because that's just awful. Yeah I have never bought a car I. Don't have a driver's license, but I will say I was I was interested in. How, they might have done in the last recession. So you can see if there are people who are listening economic service. If you look at the demand curve for normal products as income increases the demand for a product increases but with inferior goods are inferior products they do well in a recession because as income decreases demand for this product increases, and since Carmax maxell eighty, five percent of their revenue is used cars. It seems likely that they would be considered an inferior product. So if we see a recession in the future, they would be a company that would do well, and so I looked at. How they did in the last recession, and if you look at the stock from March twenty, two, thousand, eight to September Twenty fifteen, it returned two hundred, four percent compared to fifty percent for the S. and P. Five hundred. So I think looking forward and thinking long term about Carmax if you're thinking about the impacts, the long-term recession impacts of covid nineteen, this might be an interesting to think thing to think about is those inferior products versus those normalized product particularly in urban areas where you're a for people who have the means they're probably to be spending less time getting on subways if they can avoid it. I gotta say inferior goods as a categorization just sounds pejorative that sounds like something that the new auto dealers of America came up with yeah. It's not the nicest term and when you study, they'll say a bus is considered an inferior to car planes kind of insulting. But that is the technical economic term

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