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

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CarMax (KMX - Free Report) closed the most recent trading day at $63.40, moving +1.67% from the previous trading session. This change outpaced the S&P 500's 1.06% loss on the day. At the same time, the Dow lost 0.46%, and the tech-heavy Nasdaq lost 0.13%.

Heading into today, shares of the used car dealership chain had lost 6.52% over the past month, lagging the Retail-Wholesale sector's loss of 2.97% and the S&P 500's gain of 4.94% in that time.

CarMax will be looking to display strength as it nears its next earnings release. In that report, analysts expect CarMax to post earnings of $0.78 per share. This would mark a year-over-year decline of 49.02%. Meanwhile, our latest consensus estimate is calling for revenue of $7.48 billion, down 12.28% from the prior-year quarter.

KMX's full-year Zacks Consensus Estimates are calling for earnings of $4.13 per share and revenue of $32.18 billion. These results would represent year-over-year changes of -39.88% and +0.87%, respectively.

It is also important to note the recent changes to analyst estimates for CarMax. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

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. Within the past 30 days, our consensus EPS projection has moved 6.84% lower. CarMax is holding a Zacks Rank of #3 (Hold) right now.

Investors should also note CarMax's current valuation metrics, including its Forward P/E ratio of 15.1. This represents a discount compared to its industry's average Forward P/E of 17.43.

Investors should also note that KMX has a PEG ratio of 2.4 right now. 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 1.79 at yesterday's closing price.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 54, putting it in the top 22% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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