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Wednesday December 1, 2021



CarMax Reports Quarterly Earnings

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

CarMax reported net sales of $5.18 billion during the quarter. This was up 8.2% from $4.79 billion in net sales at the same time last year.

"We delivered strong EPS growth this quarter thanks to solid execution by our teams," said CarMax President and CEO Bill Nash. "Despite the near-term market challenges due to the trajectory of the pandemic, our fundamentals remain robust and reflect the strength of our diversified business model spanning retail, wholesale, and auto finance."

The company reported quarterly net income of $235.3 million, or $1.42 per share. This was up from $173.2 million, or $1.04 per share at this time last year.

CarMax has adjusted its operations this year to include contactless curbside pickup and home delivery. Potential customers are able to select and test drive vehicles without setting foot inside the company's stores. Purchasers are able to complete many steps in the buying process online. Despite these additional measures, the company's comparable store sales fell 0.8% for the quarter.

CarMax, Inc. (KMX) shares ended the week at $93.18, down 4.5% for the week.

Winnebago Posts Earnings

Winnebago Industries, Inc. (WGO) released its latest earnings report on Friday, December 18. The company's revenue and profits grew year-over-year.

Net revenue came in at $793.13 million. This was up from $588.46 million at the same time last year.

"Winnebago Industries' first quarter results underscore the strength of our unmatched portfolio of leading brands and continued demand from the end consumer for our high quality, innovative outdoor products," said Winnebago President and CEO Michael Happe. "The momentum we are seeing across our segments allowed us to capture the full value of our products in the marketplace, while continuing to gain market share."

Winnebago posted net income of $57.42 million for the quarter. This was up from $14.07 million during the same quarter last year.

With lockdown orders across the United States affecting the airline and hotel industries, Winnebago's products have grown in appeal during the year. The company sold 2,330 motorhomes during the quarter. This was a 23% rise from 1,882 motorhomes sold during the same period a year ago. The company's towables, including travel trailers and fifth wheels totaled 14,214 sold, up from 10,599 in the prior year's quarter.

Winnebago Industries, Inc. (WGO) shares ended the week at $65.01, down 4.7%.

Cintas Releases Quarterly Earnings

Cintas Corporation (CTAS) released its latest quarterly earnings on Tuesday, December 22. The company's revenue slid from the previous year's quarter.

Revenue came in at $1.76 billion. This was down from $1.84 billion during the same quarter last year.

"During our second quarter of fiscal 2021, Cintas declared its annual dividend and also announced that the Board of Directors approved a change in dividend policy from an annual dividend to quarterly dividends," said Cintas Chairman and CEO Scott D. Farmer. "Earlier this month, we paid the annual dividend of $2.81 per share, an increase of 10.2% over last year's annual dividend. We have increased the annual dividend for 37 consecutive years."

Net income for the quarter was $284.86 million. This was a 15.7% increase from $246.12 million in net income at this time last year.

The Cincinnati, Ohio-based company offers work uniform rentals for a variety of industries, including hospitality, construction and medical services. The company also offers specialized flame-resistant clothing. In addition, Cintas offers cleaning supplies, doormats and hand sanitizer. The company's uniform rental and facility services segment makes up the majority of its revenue, bringing in $1.41 billion during the quarter.

Cintas Corporation (CTAS) shares ended the week at $339.42, down 3.2% for the quarter.

The Dow started the week of 12/21 at 30,159 and closed at 30,130 on 12/23. The S&P 500 started the week at 3,684 and closed at 3,690. The NASDAQ started the week at 12,596 and closed at 12,771.

Treasury Yields Fall

Yields on U.S. Treasurys dropped this week following the passage of a long-awaited stimulus bill. Congress reached an agreement to pass a $900 billion bill at the start of the holiday week.

On Monday, Congress approved the latest round of COVID-19 relief measures. The bill includes Paycheck Protection Program loans, additional unemployment payments and $600 direct payments to individuals. However, on Tuesday, President Trump indicated that he may veto the bill if the direct payment amounts are not increased.

"The American people have a great deal to celebrate in this legislation," said Senate Minority Leader Chuck Schumer. "But of course, the agreement we reached is far from perfect."

The 10-year Treasury note yield opened the week at 0.946% on Monday but dropped to a low of 0.918% on Tuesday. The 30-year Treasury bond yield was at 1.693% to open the week, but fell to 1.651% on Tuesday.

On Tuesday, the Commerce Department released its third report on estimated gross domestic product (GDP) for the third quarter. Real GDP is estimated to have increased 33.4% in the second quarter. This follows a 31.4% decrease in GDP during the second quarter of 2020. Despite the relative rebound in GDP, consumer confidence has dipped in December. The Conference Board released its latest consumer confidence index at 88.6, down from 92.9 in November.

"Consumers' assessment of current conditions deteriorated sharply in December, as the resurgence of COVID-19 remains a drag on confidence," said Conference Board Senior Director of Economic Indicators Lynn Franco. "Overall, it appears that growth has weakened further in [the fourth quarter], and consumers do not foresee the economy gaining any significant momentum in early 2021."

The 10-year Treasury note yield closed at 0.96% on 12/23, while the 30-year Treasury bond yield was 1.70%.

Mortgage Rates Edge Further

Editor's Note: At publication time, Freddie Mac had not yet released the Primary Mortgage Market Survey for the week of December 21.

Freddie Mac released its latest Primary Mortgage Market Survey on Thursday, December 18. Rates reached a further low, marking a record this week.

This week the 30-year fixed rate mortgage reached 2.67%, down from last week's average of 2.71%. Last year at this time, the 30-year fixed rate mortgage averaged 3.73%.

The 15-year fixed rate mortgage averaged 2.21% this week. This was down from 2.26% last week. At this time last year, the 15-year fixed rate mortgage averaged 3.19%.

"The housing market continues to surge higher and support an otherwise stagnant economy that has lost momentum in the last couple of months," said Sam Khater, Freddie Mac's Chief Economist. "Mortgage rates are at record lows and pushing many prospective homebuyers off the sidelines and into the market. Homebuyer sentiment is sanguine and purchase demand shows no real signs of waning at all heading into next year."

Based on published national averages for the week of 12/21, the national savings rate was 0.05%. The one-year CD averaged 0.16%.

Published December 25, 2020
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