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 EstimatesCarvana 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 PerformanceImage Source: Zacks Investment ResearchFrom 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.Image Source: Zacks Investment ResearchEPS Estimates RevisionThe Zacks Consensus Estimate for 2025 and 2026 EPS has moved up 36 cents and 5 cents, respectively, in the past 30 days. Image Source: Zacks Investment ResearchZacks' Research Chief Picks Stock Most Likely to "At Least Double"Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren’t winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.See Our Top Stock to Double (Plus 4 Runners Up) >>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 Group 1 Automotive, Inc. (GPI): Free Stock Analysis Report Lithia Motors, Inc. (LAD): 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