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CarMax (KMX) Gains As Market Dips: What You Should Know

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In the latest trading session, CarMax (KMX - Free Report) closed at $114.56, marking a +0.45% move from the previous day. This move outpaced the S&P 500's daily loss of 0.08%.

Coming into today, shares of the used car dealership chain had lost 12.26% in the past month. In that same time, the Retail-Wholesale sector lost 2.19%, while the S&P 500 gained 1.68%.

KMX will be looking to display strength as it nears its next earnings release, which is expected to be June 25, 2021. On that day, KMX is projected to report earnings of $1.61 per share, which would represent year-over-year growth of 600%. Our most recent consensus estimate is calling for quarterly revenue of $6.04 billion, up 87.17% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.84 per share and revenue of $22.68 billion, which would represent changes of +29.2% and +19.67%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for KMX. These recent revisions tend to reflect the evolving nature of short-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system ranges from #1 (Strong Buy) to #5 (Strong Sell). It has a remarkable, outside-audited track record of success, with #1 stocks delivering an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.6% higher within the past month. KMX is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, KMX is currently trading at a Forward P/E ratio of 19.52. For comparison, its industry has an average Forward P/E of 18.7, which means KMX is trading at a premium to the group.

Also, we should mention that KMX has a PEG ratio of 1.29. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. The Automotive - Retail and Wholesale - Parts industry currently had an average PEG ratio of 1.34 as of yesterday's close.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 48, which puts it in the top 19% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.


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