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

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CarMax (KMX - Free Report) closed the most recent trading day at $79.63, moving -1.51% from the previous trading session. This move lagged the S&P 500's daily loss of 0.37%. Meanwhile, the Dow lost 0.32%, and the Nasdaq, a tech-heavy index, lost 1.18%.

Coming into today, shares of the used car dealership chain had gained 10.56% in the past month. In that same time, the Retail-Wholesale sector gained 5.52%, while the S&P 500 gained 7.18%.

Investors will be hoping for strength from CarMax as it approaches its next earnings release, which is expected to be June 23, 2023. On that day, CarMax is projected to report earnings of $0.73 per share, which would represent a year-over-year decline of 53.21%. Our most recent consensus estimate is calling for quarterly revenue of $7.28 billion, down 21.77% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $2.36 per share and revenue of $26.84 billion, which would represent changes of -22.11% and -9.57%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for CarMax. These revisions help to show the ever-changing nature of 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. Investors can capitalize on this by using the Zacks Rank. This model considers these estimate changes and provides a simple, actionable rating system.

Ranging from #1 (Strong Buy) to #5 (Strong Sell), the Zacks Rank system has a proven, outside-audited track record of outperformance, with #1 stocks returning an average of +25% annually since 1988. Within the past 30 days, our consensus EPS projection has moved 3.65% higher. CarMax currently has a Zacks Rank of #3 (Hold).

Digging into valuation, CarMax currently has a Forward P/E ratio of 34.26. Its industry sports an average Forward P/E of 24.94, so we one might conclude that CarMax is trading at a premium comparatively.

It is also worth noting that KMX currently has a PEG ratio of 1.87. 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 was holding an average PEG ratio of 1.71 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 193, which puts it in the bottom 24% 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.

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


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