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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 $141.31 in the latest trading session, marking a -1.35% move from the prior day. This move lagged the S&P 500's daily loss of 0.75%. Meanwhile, the Dow lost 0.3%, and the Nasdaq, a tech-heavy index, lost 0.23%.

Coming into today, shares of the used car dealership chain had lost 4.26% in the past month. In that same time, the Retail-Wholesale sector lost 5.11%, while the S&P 500 lost 0.13%.

Wall Street will be looking for positivity from CarMax as it approaches its next earnings report date. This is expected to be December 22, 2021. The company is expected to report EPS of $1.50, up 5.63% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $7.63 billion, up 47.2% from the year-ago period.

KMX's full-year Zacks Consensus Estimates are calling for earnings of $7.31 per share and revenue of $30.41 billion. These results would represent year-over-year changes of +61.73% and +60.46%, respectively.

Investors might also notice recent changes to analyst estimates for CarMax. Recent revisions tend to reflect the latest near-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about 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, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 0.1% lower. CarMax is currently a Zacks Rank #3 (Hold).

Looking at its valuation, CarMax is holding a Forward P/E ratio of 19.61. For comparison, its industry has an average Forward P/E of 19.68, which means CarMax is trading at a discount to the group.

Meanwhile, KMX's PEG ratio is currently 1.5. 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. The Automotive - Retail and Wholesale - Parts was holding an average PEG ratio of 1.54 at yesterday's closing price.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 69, which puts 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.

You can find more information on all of these metrics, and much more, on Zacks.com.


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