How Close is Carvana to Reaching Its Long-Term Annual Sales Target?

Carvana Co. CVNA reconditions used vehicles through a sophisticated, technology-driven, assembly-line process it refers to as its production process. This operational model enables the company to efficiently transform used cars into retail-ready inventory, which is then delivered directly to customers or via the retailer’s vending towers.

After achieving four consecutive quarters of more than 30% retail unit growth, the used car retailer has set an ambitious long-term target of achieving 3 million vehicle sales annually. To reach this milestone, it would need to increase production to approximately 90 units per week over the next 10 years, an objective the company considers highly attainable. Achieving the same target within five years would require boosting production to around 180 units per week, a more ambitious milestone but one still viewed as within reach. 

The company has increased its production capacity by an average of 80 units per week over the past 12 months, a result of rising inventory levels and growing consumer demand.

While an annual sales target of 3 million units may appear substantial, it represents a relatively modest share, around 7.5%, of the 40-million-unit U.S. used vehicle market. In comparable retail sectors, it is not uncommon for leading players to command at least this level of market share and often considerably more. As such, the goal, though ambitious, is well within the bounds of industry norms. CVNA carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Although Carvana’s competitors like Group 1 Automotive, Inc. GPI and Lithia Motors, Inc. LAD have not set any ambitious goals for annual vehicle sales, they have been expanding their geographical footprints to boost sales and capture market share. 

In May, Group 1 purchased three U.S. dealerships, consisting of a Lexus and an Acura store in Florida and a Mercedes-Benz dealership in Texas. Earlier, in the first quarter, the company also acquired a business in the United Kingdom that includes one Lexus and three Toyota dealerships. These transactions have added approximately $430 million in annualized revenues for Group 1 so far this year.

In June, Lithia added two Mercedes-Benz dealerships located in Collierville, TN, and Jackson, MS, strengthening its presence in the southeastern region of the United States. In March, Lithia acquired Elk Grove Subaru in California. Altogether, Lithia’s acquisitions to date in 2025 are expected to contribute around $400 million in annualized revenues.

Carvana’s Price Performance, Valuation and Estimates

Carvana has outperformed the Zacks Internet – Commerce industry year to date. CVNA shares have gained 50.7% compared with the industry’s growth of 3.9%.

YTD Price Performance

From a valuation perspective, Carvana appears overvalued. Going by its price/sales ratio, the company is trading at a forward sales multiple of 3.23, higher than its industry’s 2.01.

EPS Estimates Revision

The Zacks Consensus Estimate for 2025 and 2026 EPS has moved up 36 cents and 5 cents, respectively, in the past 30 days. 

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

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