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Richmond, Virginia-based CarMax, Inc. (KMX) is the largest retailer of used vehicles in the U.S. and one of the nation's largest operators of wholesale vehicle auctions. With a market cap of $12.5 billion, CarMax operates through Sales Operations and Auto Finance segments.
The used vehicle retailer has underperformed the broader market over the past year. Over the past 52 weeks, KMX is down 2.6%, lagging behind the S&P 500 Index’s ($SPX) 28.3% returns. In 2024, KMX is up 4.7% compared to SPX’s 17.6% gains on a YTD basis.
Narrowing the focus, KMX has also fallen short of the S&P 500 Cons Disc Sector SPDR’s (XLY) nearly 14% returns over the past 52 weeks but outpaced XLY’s 3.7% gains on a YTD basis.
On Jun. 21, CarMax reported fiscal Q1 net income of $152.4 million, or $0.97 per share, and revenue of $7.11 billion, missing Wall Street’s estimates. While net sales declined 7.5%, net earnings dropped 33.2% annually, raising investor concern. However, the company repurchased shares worth $104 million during the previous quarter, demonstrating its commitment to shareholders.
For the current fiscal year, ending in February 2025, analysts expect CarMax’s EPS to decline marginally year over year to $2.99. The company’s earnings surprise history is mixed. It surpassed or matched the consensus EPS estimates in two of the past four quarters while missing the estimates on two other occasions.
Among the 16 analysts covering the KMX stock, the consensus rating is a “Moderate Buy.” That’s based on seven “Strong Buy” ratings, two “Moderate Buys,” five “Holds,” one “Moderate Sell,” and one “Strong Sell.”
This configuration is slightly more bullish than three months ago, with six analysts suggesting a “Strong Buy.”
On Aug. 16, Wedbush analyst Seth Basham maintained an “Outperform” rating with a price target of $95 on KMX.
Although KMX is currently trading above its mean price target of $78.31, the Street-high price target of $105 represents a potential upside of 30.7% from current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
