Luke Sharrett | Bloomberg | Getty Images
Customers shop for used vehicles at a CarMax dealership in Lexington, Kentucky.
CarMax shares rose to an all-time high on Friday after the company reported quarterly earnings that beat expectations.
The stock closed up 12.86 percent, posting its best day since June 24, 2014.
The used-car company reported net earnings increased 12.7 percent to $238.7 million and adjusted earnings per share up 17.7 percent year over year to $1.33. Analysts polled by Reuters expected a profit of $1.24 per share. Revenue totaled $4.79 billion, topping an estimate of $4.61 billion.
CarMax said in a statement that the jump in net earnings was due to a decrease in the company’s effective tax rate to 25.3 percent from 37.4 percent in the first fiscal quarter of 2018, a result of the Tax Cuts and Jobs Act of 2017 pushed through Congress by the Trump administration last year.
In addition, CarMax’s used vehicle sales declined 2.3 percent versus an expected decline of 4.5 percent.
“While our comparable store unit sales performance improved significantly from the February 2018 quarter, we believe macro pricing factors still had some effect on our first quarter sales,” President and Chief Executive Bill Nash wrote in a statement.
CarMax also said it plans to open 12 new stores within the next 12 months, targeting metropolitan areas with populations of 600,000 or less to grab the attention of what the company calls “small markets.”
The stock was already up sharply before Friday’s bounce, having gained 10.8 percent for the year through Thursday’s close.