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

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CarMax (KMX - Free Report) closed at $85.50 in the latest trading session, marking a -0.67% move from the prior day. This move lagged the S&P 500's daily gain of 0.03%. Meanwhile, the Dow gained 0.13%, and the Nasdaq, a tech-heavy index, lost 0.11%.

Coming into today, shares of the used car dealership chain had gained 3.29% in the past month. In that same time, the Retail-Wholesale sector gained 4.61%, while the S&P 500 gained 4.17%.

KMX will be looking to display strength as it nears its next earnings release, which is expected to be September 24, 2019. In that report, analysts expect KMX to post earnings of $1.32 per share. This would mark year-over-year growth of 6.45%. Meanwhile, our latest consensus estimate is calling for revenue of $5.03 billion, up 5.56% from the prior-year quarter.

KMX's full-year Zacks Consensus Estimates are calling for earnings of $5.25 per share and revenue of $19.61 billion. These results would represent year-over-year changes of +9.6% and +7.88%, respectively.

It is also important to note the recent changes to analyst estimates for KMX. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for 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. The Zacks Consensus EPS estimate has moved 0.33% lower within the past month. KMX currently has a Zacks Rank of #3 (Hold).

Looking at its valuation, KMX is holding a Forward P/E ratio of 16.41. Its industry sports an average Forward P/E of 18.62, so we one might conclude that KMX is trading at a discount comparatively.

Also, we should mention that KMX has a PEG ratio of 1.31. 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 1.51 as of yesterday's close.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 182, which puts it in the bottom 29% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our 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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