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Tuesday August 9, 2022



CarMax Reports Quarterly Earnings

CarMax, Inc. (KMX) released its latest quarterly earnings on Tuesday, December 22. The automobile retailer's shares jumped more than 5% following the earnings release.

CarMax reported net sales of $8.5 billion during the quarter. This was up 65% from $5.2 billion in net sales at the same time last year.

"Our top line momentum continued into this quarter and we achieved record levels of third quarter unit sales in both retail and wholesale, generating all-time record revenues," said CarMax President and CEO Bill Nash. "We also bought more cars from customers than ever before. We are excited about the opportunities ahead of us and believe that by delivering the most customer-centric experience in the industry, we will enable sustainable growth and create meaningful long-term shareholder value."

The company reported quarterly net income of $269.4 million. This was up from $235.3 million at this time last year.

CarMax purchased 383,215 vehicles in the quarter, an increase of 91% from last year at that time. The company's comparable store used unit sales increased 15.8%. CarMax's retail used unit sales increase to a record of 227,424, up 16.9% in the third quarter. During the quarter, the company opened one new location.

CarMax, Inc. (KMX) shares ended the week at $130.23, up 2.6% for the week.

Blackberry Reports Revenue

BlackBerry Limited (BB) announced quarterly earnings on Tuesday, December 21. The company posted software revenue that exceeded Wall Street's estimates.

Revenue for the third quarter reached $184 million. This is down from $218 million reported during the same quarter last year, but is above the $174 million that analysts predicted.

"On the Cybersecurity front we saw further traction for our recent unified endpoint security product launches with additional head-to-head wins against other next-gen players," said BlackBerry's Executive Chairman and CEO, John Chen. "I am excited about how the current organization is executing to take advantage of the market opportunities."

BlackBerry reported net income of $74 million, which is better than last year's third quarter net loss of $130 million. On an adjusted earnings per share basis, the company posted a net loss of $0.05 per share.

The company's cybersecurity revenue reached $128 million in the quarter, down from $130 million at the same time last year. Blackberry's licensing and other revenue reached to $13 million in the quarter, down from $56 million in the same quarter last year. The company's Internet of Things (IOT) segment revenue increased to $43 million. The company noted in its earnings release that it was rated at the "best new endpoint security offering of 2021" by an independent cybersecurity research leader.

BlackBerry Limited (BB) shares closed at $9.35 on 12/31, relatively unchanged for the week.

Carnival Fourth Quarter Earnings

Carnival Corporation & plc (CCL) released its latest quarterly earnings report on Monday, December 20. The cruise ship operator's shares rose more than 3.4% following the earnings release.

Revenue for the fourth quarter totaled $1.29 billion and is below the $1.50 billion that analysts predicted. This is up from the $34 million reported in the same quarter last year.

"Since resuming guest cruise operations, we have established effective protocols for COVID-19 and its variants and have returned 65,000 team members and 50 ships, all while delivering an exceptional guest experience to over 1.2 million guests and counting. And we have done that while honoring our commitment to strive for excellence in compliance, environmental protection and the health, safety and well-being of everyone," said Carnival President and CEO, Arnold Donald. "During 2021, we believe we have clearly maximized our return to service and strengthened our financial position to withstand potential volatility on our path to profitability."

The company reported a net income loss of $2.6 billion or $2.31 per adjusted share for the quarter. This was up from $2.2 billion or $2.41 per adjusted share during the same quarter last year.

Carnival's passenger ticket, onboard and other revenues reached $674 million and $613 million. This is due in part to customer deposits increasing $360 million during the quarter. During the quarter, the company saw its capacity rate increase to 61% with guests on board and announced that it expects the full fleet to be back in operation by the spring of 2022.

Carnival Corporation & plc (CCL) shares ended the week at $20.12, down 1% for the week.

The Dow started the week of 12/27 at 35,954 and closed at 36,338 on 12/31. The S&P 500 started the week at 4,734 and closed at 4,766 on 12/31. The NASDAQ started the week at 15,697 and closed at 15,645 on 12/31.

Treasury Yields Fall

U.S. Treasury yields dipped throughout the week as investors continue to monitor the potential threat of the omicron COVID-19 variant and rising inflation levels. Yields remain unchanged on Friday as unemployment levels fell below pre-pandemic levels.

On Wednesday, the Commerce Department announced that the U.S. goods trade deficit hit a record this past November. The international trade deficit rose 17.5% to $97.8 billion in November, up $14.6 billion from $83.2 billion in October.

"The emergence of the Omicron variant may further ignite demand for imported goods if services activity is restricted," said lead economist at Oxford Economics, Nancy Vanden Houten.

The benchmark 10-year Treasury note yield opened the week of 12/27 at 1.495% and traded as high as 1.561% on Wednesday. The 30-year Treasury bond yield opened the week at 1.908% and traded as high as 1.972% on Wednesday.

On Thursday, the U.S. Department of Labor reported that initial claims for unemployment insurance totaled 198,000. This was lower than analysts' estimate of 205,000 and fell below pre-pandemic levels of 220,000 claims filed during the same time in 2019.

"It's reflecting near record high job openings and labor shortages we're seeing left and right. From a claim standpoint ... companies are holding on tight to their existing employees and desperately searching for more," said chief investment officer of Bleakley Advisory, Peter Boockvar.

The 10-year Treasury note yield closed at 1.51% on 12/23, while the 30-year Treasury bond yield was 1.90%.

Mortgage Rates Hold Steady

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 30. Mortgage rates remain relatively unchanged this week as markets continue to reflect the latest news regarding the COVID-19 Omicron variant.

This week, the 30-year fixed rate mortgage averaged 3.11%, up from last week's average of 3.05%. Last year at this time, the 30-year fixed rate mortgage averaged 2.67%.

The 15-year fixed rate mortgage averaged 2.33% this week, up from 2.30% last week. During the same week last year, the 15-year fixed rate mortgage averaged 2.17%.

"Mortgage rates have effectively been moving sideways despite the increase in new COVID cases. This is because incoming economic data suggests that the economy remains on firm ground, particularly cyclical industries like manufacturing and housing. Moreover, low interest rates and high asset valuations continue to drive consumer spending," said Freddie Mac's Chief Economist, Sam Khater. "While we do expect rates to rise, the push of the first-time homebuyer demographic that's been propelling the purchase market will continue in 2022 and beyond."

Based on published national averages, the savings rate was 0.06% as of 12/20. The one-year CD averaged 0.13%.

Published December 31, 2021

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