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CarMax (KMX) stock: ready to reach new highs?

8:29 am ET, 26 Sep 2018

CarMax Inc (KMX) shares are trading at $80.00, up 5% in pre-market trading.  The company announced its quarterly earnings results today before the market opening--and it beat analyst expectations.  What's driving KMX stock price? What's KMX stock price forecast?

CarMax Inc is a leading used-car retailer. The stock has yielded a return of 22% this year and is performing very well after testing the lows in April. The company’s bottom line benefits from the lower tax rate which came down to 25.3% from the previous rate of 37.4%. Investment bankers have also upgraded the stock recently.

Investors love the stock since the company is perceived as the leader in the used-vehicle market. On the other hand, certain investors worry about the falling pace of customer traffic.  In the last quarter's results, same-store sales fell 2.3% but better than the 8% drop for the fourth quarter of fiscal 2018.

CarMax released the second-quarter FY19 results before the market opened on September 26, 2018.  In its earnings resultsthe company reported net sales and operating revenues increased 8.6% to $4.77 billion, while the net earnings per diluted share increased 26.5% to $1.24.  The analysts expected the company to earn $1.22 per share on revenue of $4.64 billion. CarMax beat analyst estimates in the previous four quarters.

What is the sentiment towards the KMX stock? Our technical analysis shows that:

  • The stock short-term sentiment (next 30 days) is trending positive;
  • The mid-term sentiment (3-6 months) is positive;
  • The long-term sentiment (9-12 months) is trending positive. 

Over the last month, CarMax Inc (KMX) returned +8.45%.

CarMax Inc (KMX) average analyst price target ($83.47) is 4.53% above its current price ($79.85).

For the latest price and information on CarMax Inc, please visit Finstead and search for "KMX price" or "KMX news".

CarMax Inc (KMX) Stock Guide

Updated at: 3:22 am ET, 18 Sep 2020

Before we start: if you're looking for KMX stock price, you can quickly find it out by visiting Finny and typing "KMX quote". If you're looking for a quick scoop on KMX stock (chart, price target, market cap, news and buy or sell analysis), go to Finny and look for "KMX". You'll get all this info in one place. Or you can just type "KMX news" to get the latest stock news.

Looking to buy or sell CarMax Inc (KMX)? Interested in getting the full scoop on KMX, including earnings and dividends, stock forecast, buy or sell analysis and key stats? If so, you came to the right place.

In this KMX stock guide, we'll address key questions about KMX, above and beyond what you can find on Yahoo Finance, Zacks, MarketWatch or Morningstar.

Here is what you'll be able to find in this guide:

Earnings and Dividends: earnings, earnings date, dividend rate and dividend yield;
Analyst Predictions: stock forecast and analyst ratings;
Analysis: Finny Score and buy or sell analysis;
Key Stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio, industry, sector, and number of employees.

And here is the list of questions we'll answer:
1. What are KMX earnings?
2. What is KMX stock forecast (i.e., prediction)?
3. KMX buy or sell? What is KMX Finny Score?
4. What are the reasons to buy KMX? Why should I buy KMX stock?
5. What are the reasons to sell KMX? Why should I sell KMX stock?
6. What are KMX key stats: revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

So let's start. Scroll down to the question that interests you the most.

Earnings and Dividends

1. What are KMX earnings?

KMX trailing 12-month earnings per share (EPS) is $3.79.

Analyst Predictions

2. What is KMX stock forecast (i.e., prediction)?

Based on KMX analyst price targets, KMX stock forecast is $109.40 (for a year from now). That means the average analyst price target for KMX stock is $109.40. The prediction is based on 17 analyst estimates.

The low price target for KMX is $87.00, while the high price target is $130.00.

KMX analyst rating is Hold.

Analysis

3. KMX buy or sell? What is KMX Finny Score?

#{finnyScore:0}Our quantitative analysis shows 0 reasons to buy and 7 reasons to sell KMX, resulting in Finny Score of 0.

4. What are the reasons to buy KMX? Why should I buy KMX stock?

Here are the reasons to buy KMX stock:

  • CarMax has increased revenue and profitability at a remarkable rate, and we think the company is positioned to gain market share in any environment.
  • With long-term plans to add stores in new and existing markets at a healthy annual growth rate in a highly fragmented industry, CarMax has excellent growth prospects for new- and comparable-store revenue.
  • No competitors have successfully duplicated CarMax's business model, providing the company with a considerable head start on would-be imitators.

5. What are the reasons to sell KMX? Why should I sell KMX stock?

Let's look at the reasons to sell KMX stock (i.e., the bear case):

  • CarMax operates in a cyclical industry, and its strong model is not immune to a recession.
  • In the past, the company was not free cash flow positive as new store openings ramped up, but we think investing today to outearn the cost of capital is worth it. In recent times, the company has generated strong free cash flow despite opening new stores.
  • Some of the largest franchise auto dealers are trying to replicate CarMax's success with their own stand-alone used vehicle stores.
  • KMX stock price ($102.99) is close to the 52-week high ($108.84). Perhaps now is a good time to sell? See KMX price chart.
  • KMX quarterly revenue growth was -37.70%, lower than the industry and sector average revenue growth (2.20% and 0.78%, respectively). See KMX revenue growth chart.
  • KMX profitability is declining. The YoY profit margin change was -0.07 percentage points. See KMX profitability chart.
  • KMX forward P/E ratio is 20.76, which is high compared to its industry peers’ P/E ratios. See KMX forward P/E ratio chart.
  • KMX short share of float is 8.84%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See KMX short share of float chart.
  • KMX short interest (days to cover the shorts) ratio is 11.57. The stock garners more short interest than the average industry, sector or S&P 500 stock. See KMX short interest ratio chart.
  • KMX cash to debt ratio is 0.04, lower than the average industry (0.11) and sector (0.13) cash to debt ratio. See KMX cash to debt chart.

Key Stats

6. What are KMX key stats : revenue, market cap, revenue growth, profit margin, P/E ratio, P/B ratio industry, sector, and number of employees?

Let's look at the key statistics for KMX:

Metrics KMX
Price $90.88
Average Price Target / Upside $118.83 / 30.75%
Average Analyst Rating Hold
Forward Dividend Yield 0.00%
Industry Auto & Truck Dealerships
Sector Consumer Cyclical
Number of Employees 25,110
Market Cap $15.03B
Forward P/E Ratio 16.38
Price/Book Ratio 0.77
Revenue (TTM) $19.48B
YoY Quarterly Revenue Growth 3.20%
Profit Margin 3.54%

If you liked this analysis, check out Stock Guides for other stocks.

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