Why is Carvana (CVNA) down 12.1% since its last earnings report?

It’s been a month since Carvana’s (CVNA) last earnings report. Shares have lost about 12.1% in that time, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Carvana due for a breakout? Before we dive into the recent reaction from investors and analysts, let’s take a quick look at the company’s most recent earnings report in order to get a better handle on the important factors influencing the situation.

Carvana’s first quarter loss smaller than expected

Carvana posted a loss of 41 cents per share in the first quarter of 2024, narrower than the Zacks Consensus Estimate of a loss of 76 cents and a quarterly loss of $1.51 per share last year, helped by stronger-than-expected sales across the board. segments . Revenues of $3.06 billion surpassed the Zacks Consensus Estimate of $2.71 billion but increased 17.5% year-over-year.

The most important information

Total gross profit was $591 million, up 73.3% year over year. Total gross profit per unit (GPU) was $6,432, reflecting a 49.5% year-over-year increase and exceeding our estimate of $5,903. Selling, general and administrative expenses were $456 million, down 3.3% year-over-year. Carvana achieved adjusted EBITDA of $235 million for the first quarter of 2024. Adjusted EBITDA margin for the quarter was a record 7.7%, compared to negative 0.9% in the first quarter of 2023.

Segment efficiency

Total vehicle retail sales for the quarter were $2.17 billion, up 19% year-over-year and topped our estimate of $2.07 billion on higher-than-expected sales volume. In the reported quarter, the number of vehicles sold to retail customers increased by 15.9% to 91,878 compared to the prior-year period and exceeded our estimate of 84,827 units. Gross profit was $283 million, up 157.3% year over year. Gross profit per unit was $3,080, a significant increase from the $1,388 generated in the year-ago period and exceeding our expectations of $2,862.

In the first quarter, wholesale vehicle sales were $657 million, up 6.3% year-over-year. Sales exceeded our estimates of $398 million with higher-than-expected unit sales. In the reported quarter, the number of vehicles sold to wholesale customers increased by 25.8% to 44,155 compared to the previous year and exceeded our estimate of 39,133 units. Gross profit was $79 million, up 13% from the same quarter in 2023. GPU was $860, down 2.6% year-over-year. However, it exceeded our estimate of $765.

During the period under review, other sales and revenues increased 42.2% year over year to USD 229 million, which exceeded our forecast of USD 142.8 million. Gross profit was $229 million, up 42.2% year over year. The GPU price was $2,492, up 22.6% year-over-year and surpassing our estimate of $2,275.

Financial position

Carvana’s cash and cash equivalents as of March 31, 2024 were $252 million, compared to $530 million as of December 31, 2023. Long-term debt was $5.54 billion as of March 31, 2024, compared to 5 .41 billion USD recorded as of December 31, 2023.

Perspectives

Carvana expects year-over-year retail unit sales growth to increase sequentially in the second quarter of 2024. It also expects adjusted EBITDA to increase sequentially in the second quarter of 2024. For the full year 2024, Carvana expects retail units to increase sequentially and adjusted EBITDA to increase from year by year.

How have estimates changed since then?

Over the last month, investors have seen an upward trend in new estimates.

As a result of these changes, the consensus estimate moved by 93.64%.

VGM results

Carvana currently has a strong Growth Score of A, although it lags well behind its Momentum Score of C. Plotting a somewhat similar path, the stock was rated a B for Value, putting it in the top 40% for this investment strategy.

Overall, the company’s Total VGM Score is A. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for the stock are trending upwards, and the scale of these revisions looks promising. It’s no surprise that Carvana carries a Zacks Rank #2 (Buy). We expect an above-average rate of return on shares in the coming months.

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