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Carvana (NYSE:CVNA) Q3 Earnings: What Can You Expect?

in EARNINGS/INVESTING IDEAS by

Carvana Co. (NYSE:CVNA) is scheduled to report Q3 earnings results on October 29, 2020.

The company is expected to report earnings of -$0.29/share on revenue of $1.516 billion. The consensus earnings per share (EPS) of -$0.29/share is based on a poll of 18 analysts and represents a growth in eps of 48.9% over the same quarter last year, when the company reported earnings of -$0.56/share.

The revenue forecast of $1.516 billion based on a poll of 18 analysts implies a year-over-year (YoY) growth in revenue of 38.5%. Last year the company reported $1.095 billion in revenue for the quarter.

Expected to report EPS of -$0.29/share for Q3, 2020
Metric Expected Prior Year YoY Change
Revenue $1,516.50 $1,095.00 38.5%
EPS -$0.29 -$0.56 48.9%

Earnings Call Trends

Historically, management has exceeded analyst expectations 2 out of the last 8 tracked quarters, and missed expectations 6 quarters.

What are your expectations from Carvana Co. for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q2, 2020 -$0.79 -$0.62 21.1% Beat
Q1, 2020 -$0.64 -$1.18 -83.3% Missed
Q4, 2019 -$0.63 -$0.79 -26.3% Missed
Q3, 2019 -$0.39 -$0.56 -42.6% Missed
Q2, 2019 -$0.43 -$0.40 6.3% Beat
Q1, 2019 -$0.48 -$0.53 -11.3% Missed
Q4, 2018 -$0.49 -$0.55 -12.3% Missed
Q3, 2018 -$0.38 -$0.40 -4.7% Missed

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2020, the stock price reacted by increasing 33.8%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
August 5, 2020 $166.69 $222.99 33.8% Increase
May 6, 2020 $86 $97.67 13.6% Increase
February 26, 2020 $104.04 $88.77 −14.7% Decline
November 6, 2019 $81.52 $73.12 −10.3% Decline

The other question to consider is one of earnings manipulation. There is a lot of pressure on management each quarter to deliver on earnings expectations. The Beneish M-Score is a statistical model that provides some insight into whether the company might be manipulating earnings. With a Beneish M-Score of −1.55, the model suggests that the company is likely an earnings manipulator. A value of −1.55 implies a 6.1% chance of earnings manipulation.

Fundamentals And Technical Analysis

Carvana Co. is currently trading at $201.38/share, down −0.6% for the day. The company is trading at approximately 83.2% of its 52-week high of $242.15/share. The company’s stock price is down −9.7% since the last earnings report and up 0.7% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 50.28 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.


NYSE:CVNA Stock Price Chart
Source: Finbox

The current share price implies a price-to-earnings (P/E) multiple of −81.32 and a forward P/E multiple of −35.04.

Carvana Co.’s current share price also implies a price-to-book (P/B) multiple of 83.11. The following table summarizes some other key fundamental ratios:

Data as of October 27, 2020
Metric Value
Last Reported Fiscal Period Key FY2020.Q2
Period End Date June 30, 2020
Stock Price (Current) $201.38
P/E Ratio −81.3x
P/E Ratio (Fwd) −35.0x
PEG Ratio 1.5
Total Debt / Total Capital 3.3%
Levered Free Cash Flow -$951.2 million
EV / EBITDA −46.0x

Finbox

Carvana Co. is a large-cap stock with a market capitalization of $13.983 billion and a total enterprise value of $15.391 billion. The company operates in the Consumer Discretionary sector and the Specialty Retail industry.

Carvana Co., together with its subsidiaries, operates an e-commerce platform for buying and selling used cars in the United States. Its platform allows customers to research and identify a vehicle; inspect it using company’s 360-degree vehicle imaging technology; obtain financing and warranty coverage; purchase the vehicle; and schedule delivery or pick-up from their desktop or mobile devices. The company was founded in 2012 and is headquartered in Tempe, Arizona.

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