02:40 PM EDT, 04/08/2024 (MT Newswires) -- CarMax ( KMX ) checks are signaling upside to prior RBC Capital Markets' estimates for the fiscal fourth quarter, though factors like better-than-anticipated industry data are likely already priced into the share price, the brokerage said Monday.

RBC raised its retail comparable unit sales estimate to reflect a decline of 1% versus a prior view that they would be down 3%, remaining below the flat consensus. It is now modeling a total sales decline of 2.4%, compared with the previous expectation of a 4% decline. The consensus is for sales to rise 1.4%, the report showed.

Earnings per share is now seen at $0.50, up from RBC's prior $0.46 target, which is the consensus. EPS upside is being driven by selling, general and administrative expenses, which has given CarMax ( KMX ) "more cost flex" than the Street's expectations, analyst Steven Shemesh said.

Data from Cox Automotive indicated used retail vehicle sales volume was up 2% throughout CarMax's ( KMX ) fiscal fourth quarter, rebounding from a decline of 3.8% in the third quarter when CarMax's ( KMX ) comp used unit sales dropped 4.1%. Manheim's used vehicle value index showed average selling prices trending down 9.8% during the quarter.

The used car retailer is scheduled to report fourth-quarter results on Thursday. Its shares climbed 2.6% at $83.7 in Monday afternoon trade.

"While we expect a fine quarter, we think this is largely already embedded in shares," Shemesh said while reiterating an outperform rating and a $83 price target on the stock.

Shares seem to be implying a calendar-year 2025 EPS of around $4.80, well above both the RBC and consensus views of $4.54 and $4.24, respectively. "We don't view this as unreasonable, but a rebound in units will be required," the analyst wrote.

"Between non-linear fundamentals and increased uncertainty around the pace/timing of rate cuts, we see potential for near-term share price volatility, but at the end of the day the economy has remained resilient, which should bode well for (2025)," Shemesh said.

Price: 83.25, Change: +1.76, Percent Change: +2.16