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Summary
- Consumer cyclical stocks, which include stocks of companies producing consumer discretionary goods, move in tandem with the market.
- CarMax, a car retailing business, reported total revenue of US$ 5.722 billion during the February 2023 quarter.
- Darden is a restaurant operator that reported total revenue of US$ 2.78 billion for the February 2023 quarter.
Consumer cyclical stocks include stocks issued by companies producing goods that are not considered to be necessities. These include products such as luxury items or entertainment goods.
The term ‘cyclical’ represents the cyclical relationship these stocks have with the market. As the market goes up, these stocks also move concurrently with the market. Alternatively, during times of distress, these stocks may not perform well.
The S&P 500 attained its highest level since April 2022 on Monday, June 12, 2023. As the market started on a slow note this year, the current rally comes as a breath of fresh air. On that note, here are two consumer cyclical stocks that can be examined at this time.
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CarMax, Inc. (NYSE: KMX)
The company in the car retailing business in which it sells, finances and services used and new cars. The company has above 230 used retail stores. These used vehicles sales account for around 83% of the company’s revenues, while wholesale sales account for 13% of revenues.
For the February 2023 quarter, CarMax reported total revenue of US$ 5.722 billion, as against a total revenue of US$ 6.505 billion in the November 2022 quarter. The gross profit during the February 2023 quarter was US$ 610 million.
Image source: ©2022 Kalkine®; Data source: Company Reports
The net income to common stockholders was US$ 687 million for the three months ended February 2023. The EBITDA for the quarter was negative US$ 2.799 billion.
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Darden Restaurants Inc (NYSE:DRI)
Darden, a restaurant operator giant in the US, has a portfolio of eight restaurant chains. Some of the company’s restaurants include Olive Garden, Yard House and LongHorn Steakhouse. Darden’s revenue comes from its company-owned restaurants, and it also generates sales through its traditional grocery channel.
Darden reported total revenue of US$ 2.78 billion for the February 2023 quarter, as against a total revenue of US$ 2.48 billion during the November 2022 quarter. The gross profit for the February 2023 quarter was US$ 584 million, while the EBITDA was US$ 448 million.
Image source: ©2022 Kalkine®; Data source: Company Reports
The net income to common stockholders was US$ 286 million for the three months ended February 28, 2023. The company will hold its fourth quarter conference call on June 22, 2023.
