Carvana Pre-Q2 Earnings Analysis: Buy, Sell or Hold the Stock?

Carvana CVNA is slated to release second-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 $1.10 per share and $4.56 billion, respectively.The earnings estimate for the second quarter of 2025 has moved up by a cent over the past seven days, indicating a whopping 685.7% growth year over year. The Zacks Consensus Estimate for quarterly revenues suggests a year-over-year increase of 33.6%. Image Source: Zacks Investment ResearchThe Zacks Consensus Estimate for CVNA’s 2025 revenues is pegged at $18.1 billion, implying a rise of 32.3% year over year. The consensus mark for 2025 EPS is pegged at $5.04, calling for a year-over-year jump of 217%. In the trailing four quarters, this e-retailer of used vehicles surpassed EPS estimates on all occasions.Q2 Earnings Whispers for CarvanaOur proven model predicts an earnings beat for Carvana this time around as well. 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 +5.48% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.Factors to Note Ahead of CVNA’s Q2 ResultsCarvana’s retail sales are gaining momentum again. In the first quarter of 2024, it returned to year-over-year growth for the first time since mid-2022. The company has now sold over 100,000 vehicles for four straight quarters and remains the second-largest used car retailer in the United States. Retail unit sales jumped 46% year over year in the first quarter of 2025, and Carvana expects that growth to continue in the to-be-reported quarter. We forecast a 33.8% year-over-year increase, with around 135,750 vehicles sold in the June quarter.On the cost front, Carvana’s turnaround strategy is paying off. The company has been cutting expenses through better tech, leaner staffing, reduced advertisement spending, and smarter inventory management. These moves are boosting efficiency and profits. For the second quarter of 2025, we expect adjusted EBITDA to grow nearly 48% year over year to $524.2 million, with margin expansion likely to continue.CVNA Price Performance & ValuationOn a year-to-date basis, shares of CVNA have surged 60%, significantly outperforming its close peers CarMax KMX and Sonic Automotive SAH and the auto sector. Image Source: Zacks Investment ResearchIn terms of valuation, Carvana trades at a forward 12-month P/S of 3.38—well above CarMax (0.32) and Sonic Automotive (0.17). Despite CarMax and Sonic Automotive offering lower multiples, CVNA’s premium reflects stronger growth expectations. Image Source: Zacks Investment ResearchBuy Carvana Stock Ahead of Q2 Results?Carvana’s turnaround is gaining traction. The company is hitting key goals—like delivering positive adjusted EBITDA, improving profit per vehicle and scaling efficiently. Its adjusted EBITDA margin now leads the public auto dealer pack at 11.5%, thanks to smart cost cuts in areas like reconditioning and logistics. More gains are expected in 2025, including growth in retail unit sales.The ADESA U.S. acquisition has strengthened Carvana’s logistics and vehicle processing. Despite being the second-largest used car seller in the United States, Carvana has only around 1% market share, leaving significant room to grow. Its tech-driven, scalable model gives it a clear edge in today’s evolving retail landscape.That said, rising auto part tariffs could increase reconditioning costs and squeeze per-unit profits. Plus, Carvana’s balance sheet remains stretched, with a high debt-to-capital ratio of 0.75. Valuation also looks rich at current levels. If Carvana continues to execute well, the premium may hold—but for new investors, it might be wise to wait for a pullback. Existing investors, however, should consider holding on.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. As data centers continue to be built and constantly upgraded, the companies that provide the hardware for these behemoths will become the NVIDIAs of tomorrow.One under-the-radar chipmaker is uniquely positioned to take advantage of the next growth stage of this market. It specializes in semiconductor products that titans like NVIDIA don't build. It's just beginning to enter the spotlight, which is exactly where you want to be.See This Stock Now for Free >>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 CarMax, Inc. (KMX): Free Stock Analysis Report Sonic Automotive, Inc. (SAH): Free Stock Analysis Report Carvana Co. (CVNA): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks