Is CVNA Stock a Buy Pre-Q1 Earnings? Key Metrics to Watch

Carvana CVNA is slated to release first-quarter 2025 results on Wednesday, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 75 cents per share and $4.04 billion, respectively.

The earnings estimate for the first quarter of 2025 has moved up by 2 cents over the past seven days. In the year-ago quarter, the company had incurred a loss of 41 cents per share. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 32%.

The Zacks Consensus Estimate for CVNA’s 2025 revenues is pegged at $17.20 billion, implying a rise of 25.8% year over year. The consensus mark for 2025 EPS is pegged at $3.67, calling for a whopping increase of 130.8%. In the trailing four quarters, this e-retailer of used vehicles surpassed EPS estimates on all occasions.

Q1 Earnings Whispers for Carvana

Our proven model predicts an earnings beat for Carvana this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

CVNA has an Earnings ESP of +4.89% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Factors to Note Ahead of CVNA’s Q1 Results

Carvana’s used vehicle retail sales returned to growth in the first quarter of 2024 — the first time since June 2022. The company sold over 100,000 vehicles in each of the last three quarters of 2024 and ranked as the second-largest used car retailer in the United States. In the final quarter of 2024, retail units sold surged 50% year over year. Encouragingly, Carvana expects continued sequential growth in the first quarter of 2025. Our model projects a 32.6% year-over-year increase in retail units sold, reaching approximately 121,868 vehicles for the March quarter.

Additionally, Carvana’s cost-cutting strategy is delivering solid results. For the first quarter of 2025, we estimate adjusted EBITDA to rise 85% year over year to $434.5 million, driven by improved operational efficiency. The company has been streamlining its operations through various tech, product, and process initiatives. It has also made meaningful cuts to SG&A expenses by optimizing staffing, scaling back on advertising, and better managing inventory. These moves are expected to support further improvement in adjusted EBITDA margins in the upcoming report.

CVNA Price Performance & Valuation

On a year-to-date basis, shares of CVNA have surged 26%, significantly outperforming its close peers CarMax KMX and Sonic Automotive SAH and the auto sector.

YTD Price Performance Comparison

From a valuation lens, Carvana trades at a forward 12-month P/S of 2.97—well above CarMax (0.37) and Sonic Automotive (0.15). Despite CarMax and Sonic Automotive offering lower multiples, CVNA’s premium reflects stronger growth expectations. If the company sustains its execution, the premium could be warranted.

CVNA's P/S Vs. KMX & SAH

Buy Carvana Stock Ahead of Q1 Results?

Carvana’s turnaround strategy is clearly working. Its focus on hitting key goals—like positive adjusted EBITDA, better profits per vehicle, and growing efficiently—is paying off. In 2024, the company delivered a record adjusted EBITDA of $1.4 billion with an industry-leading 10.1% margin. Cost-cutting in areas like vehicle reconditioning and transport has boosted profitability, and Carvana expects even more gains in 2025.

The acquisition of ADESA’s U.S. operations has made Carvana stronger in logistics and vehicle processing. Even as the second-largest used car retailer in the country, it holds only about 1% of the market, leaving lots of room to grow in this fragmented space. Its unique, tech-driven business model and scalable platform give it an edge in a changing retail environment.

While economic headwinds remain, Carvana’s improved efficiency, strong fundamentals and clear path to growth are encouraging signs. With expectations of earnings beat in the quarter-to-be reported, momentum looks strong. As such, CVNA stock appears worth considering ahead of its upcoming results.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research