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CarMax (KMX) Outpaces Stock Market Gains: What You Should Know

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CarMax (KMX - Free Report) closed the most recent trading day at $144.50, moving +1.28% from the previous trading session. This move outpaced the S&P 500's daily gain of 1.17%. Meanwhile, the Dow gained 1.87%, and the Nasdaq, a tech-heavy index, added 0.57%.

Heading into today, shares of the used car dealership chain had lost 7.76% over the past month, lagging the Retail-Wholesale sector's loss of 5.34% and the S&P 500's loss of 2.46% in that time.

Investors will be hoping for strength from CarMax as it approaches its next earnings release. In that report, analysts expect CarMax to post earnings of $1.47 per share. This would mark year-over-year growth of 3.52%. Meanwhile, our latest consensus estimate is calling for revenue of $7.54 billion, up 45.47% from the prior-year quarter.

For the full year, our Zacks Consensus Estimates are projecting earnings of $7.32 per share and revenue of $30.26 billion, which would represent changes of +61.95% and +59.66%, respectively, from the prior year.

Investors should also note any recent changes to analyst estimates for CarMax. These revisions typically reflect the latest short-term business trends, which can change frequently. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Based on our research, we believe these estimate revisions are directly related to near-team stock moves. 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. Within the past 30 days, our consensus EPS projection has moved 0.04% higher. CarMax is holding a Zacks Rank of #3 (Hold) right now.

In terms of valuation, CarMax is currently trading at a Forward P/E ratio of 19.5. This represents a premium compared to its industry's average Forward P/E of 19.32.

Also, we should mention that KMX has a PEG ratio of 1.49. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. KMX's industry had an average PEG ratio of 1.53 as of yesterday's close.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 70, putting it in the top 28% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual 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.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.


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