Carvana CVNA is slated to release fourth-quarter 2024 results on Wednesday, after market close. The Zacks Consensus Estimate for the to-be-reported quarter’s earnings and revenues is pegged at 24 cents per share and $3.33 billion, respectively.

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

The earnings estimate for the fourth quarter of 2024 has moved south by a cent over the past 30 days. In the year-ago quarter, the company had incurred a loss of $1/share. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 37.2%.

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The Zacks Consensus Estimate for CVNA’s 2025 revenues is pegged at $16.24 billion, implying a rise of 20.8% year over year. The consensus mark for 2025 EPS is pegged at $2.85, calling for a whopping increase of 123%. In the trailing four quarters, this e-retailer of used vehicles surpassed EPS estimates thrice and missed on one occasion.

Q4 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 +12.43% and a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank socks here.

What’s Shaping CVNA’s Q4 Results?

Used vehicle retail units sold by Carvana returned to growth for the first time in the first quarter of 2024 since June 2022. In the second and third quarters of 2024, Carvana sold more than 100,000 cars and was the second-largest used car retailer in the United States. Retail units in the third quarter of 2024 grew 34% and 7% on a yearly and sequential basis, respectively. Encouragingly, the company expects a sequential increase in the year-over-year growth rate of retail unit sales in the fourth quarter of 2024. Our model expects retail units sold to increase 47% year over year to 112,021 vehicles in the December quarter.

Additionally, the company’s cost-cutting efforts are paying off. For the fourth quarter of 2024, we forecast adjusted EBITDA to rocket 493% year over year to $356 million on the back of enhanced operational efficiency across the business, with several technology, process and product initiatives underway. The company has successfully reduced its SG&A expenses by right-sizing staffing, advertising and inventory. These factors are likely to buoy CVNA’s adjusted EBITDA margins in the to-be-reported quarter.

CVNA Price Performance & Valuation

On a year-to-date basis, shares of CVNA have surged 40%, significantly outperforming its close peer CarMax KMX as well as auto industry and the S&P 500.

YTD Price Performance Comparison

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From a valuation standpoint, it's trading at a forward 12-month sales multiple of 3.55, higher than the industry and its own 5-year median as well as industry.

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Worth Buying Carvana Stock Ahead of Q4 Results?

Carvana’s strategic pivot from aggressive growth to operational efficiency has been a key factor in its recent success. The company’s three-step plan—achieving positive adjusted EBITDA, increasing EBITDA per unit and returning to growth with a leaner model—has yielded tangible results. Central to this progress are cost reductions in retail reconditioning and inbound transport, achieved through operational improvements such as in-sourcing, process standardization and enhanced logistics.

Early this year, Carvana secured a significant deal with Ally Financial ALLY to sell up to $4 billion in auto loan receivables. This agreement came after Hindenburg Research disclosed a short position in the company and described CVNA’s recovery as a mirage driven by unreliable loans and manipulative accounting. While Hindenburg soon shut down operations after its accusations on Carvana, the deal with Ally alleviated concerns about Carvana’s ability to market its loans, helping to sustain investor confidence in the stock.

Investors should note that Carvana — being the second largest used car retailer in the country — still holds only a 1% share of the highly fragmented U.S. automotive retail market. This suggests that there is ample room for the company to expand, especially as more consumers gravitate toward online car buying.The acquisition of ADESA’s U.S. operations has enhanced CVNA’s logistics, auction and reconditioning capacities. 

It beat bottom-line estimates in the first three quarters of 2024 and is likely to continue its winning streak in the to-be-reported quarter as well. We remain bullish on Carvana and believe investors should consider buying the stock ahead of its fourth-quarter results, as it is well-positioned for further upside.

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