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CarMax (KMX) Rides on Store Expansion Amid Expense Woes

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We issued an updated research report on CarMax, Inc. (KMX - Free Report) on Jun 10.

Headquartered in Richmond, VA, the company operates as a specialty retailer of used and new vehicles. CarMax pursues an aggressive store expansion initiative in existing as well as new television markets. Moreover, the company is making improvements to its digital platform to increase website traffic. In fourth-quarter fiscal 2019, it opened five stores. In the current quarter, it intends to open three stores in existing markets.

However, huge SG&A expenditure is a concern for the company. This increase primarily resulted from expenses related to store openings, increased investments to develop technology platforms and digital initiatives along with share-based compensation expenses.

Over the past 30 days, the Zacks Consensus Estimate for current-year earnings has increased 0.2% to $5.15.

In the past three months, shares of CarMax have outperformed the industry it belongs to. Over this time frame, the stock has gained 35% while the industry grew 12%.

 

 

CarMax currently carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the auto space are Ford Motor Company (F - Free Report) , Fox Factory Holding Corp. (FOXF - Free Report) and Cummins Inc. (CMI - Free Report) , each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ford has an expected long-term growth rate of 7.3%. Over the past six months, shares of the company have gained 13.6%.

Fox Factory has an expected long-term growth rate of 16.4%. Over the past six months, shares of the company have gained 11.1%.

Cummins has an expected long-term growth rate of 8%. Over the past six months, shares of the company have gained 3%.

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