CarMax Inc (KMX, Financial) experienced a notable stock price increase of 3.97%, reaching $84.65. This rise comes on the heels of the company's impressive third-quarter earnings report, which surpassed analysts' expectations for both revenue and EPS. The CEO of CarMax emphasized a more stable environment for vehicle valuations, a crucial factor for the business.
From a valuation perspective, CarMax Inc is currently trading at a price-to-earnings (P/E) ratio of 31.82. This ratio is close to its 10-year high, indicating that the stock might be considered overvalued by some investors. The company's price-to-book (P/B) ratio is 2.13, while its price-to-sales (P/S) ratio stands at 0.53, both of which are near their respective two-year highs.
CarMax's market cap is approximately $13.11 billion, and its enterprise value (EV) is about $31.28 billion. Despite the strong market performance, GF Value indicates the stock is "Modestly Overvalued" with a GF value estimate of $73.45. Interested investors can check the GF Value here.
The company's financial health shows mixed signals. The Altman Z-Score of 1.81 places CarMax in the grey area, suggesting some financial stress but not necessarily indicating imminent bankruptcy. On the positive side, the Beneish M-Score suggests that CarMax is unlikely to be a manipulator, which is reassuring for investors.
The revenue per share for CarMax has declined over the past year, reflecting a revenue growth challenge of -3.4% year-over-year. Additionally, the company's gross margin has been in a long-term decline, dropping by an average of 7.4% annually. However, CarMax has a substantial cash flow growth rate of 78.1% over the past year, a positive indicator of the company's operational efficiency and ability to generate cash.
Despite the fluctuations in gross margin and revenue, CarMax remains the largest used-vehicle retailer in the U.S., holding a market share of approximately 3.7% for vehicles aged 0-10 years, with an aspiration to expand this to over 5% in the coming years.
