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CarMax (KMX) Dips More Than Broader Markets: What You Should Know

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CarMax (KMX - Free Report) closed at $133.95 in the latest trading session, marking a -0.76% move from the prior day. This move lagged the S&P 500's daily loss of 0.54%.

Coming into today, shares of the used car dealership chain had gained 3.36% in the past month. In that same time, the Retail-Wholesale sector lost 2.16%, while the S&P 500 gained 3.05%.

Wall Street will be looking for positivity from KMX as it approaches its next earnings report date. On that day, KMX is projected to report earnings of $1.75 per share, which would represent a year-over-year decline of 2.23%. Our most recent consensus estimate is calling for quarterly revenue of $6.42 billion, up 19.41% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.73 per share and revenue of $26.47 billion, which would represent changes of +48.89% and +39.69%, respectively, from the prior year.

Investors might also notice recent changes to analyst estimates for KMX. These revisions help to show the ever-changing nature of near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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. Over the past month, the Zacks Consensus EPS estimate has moved 3.26% higher. KMX is currently sporting a Zacks Rank of #1 (Strong Buy).

In terms of valuation, KMX is currently trading at a Forward P/E ratio of 20.06. This valuation marks a premium compared to its industry's average Forward P/E of 19.77.

Also, we should mention that KMX has a PEG ratio of 1.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. Automotive - Retail and Wholesale - Parts stocks are, on average, holding a PEG ratio of 1.52 based on yesterday's closing prices.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 5, putting it in the top 2% 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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