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

In the latest trading session, CarMax (KMX) closed at $127.48, marking a +1.55% move from the previous day.

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This story originally appeared on Zacks

In the latest trading session, CarMax (KMX) closed at $127.48, marking a +1.55% move from the previous day. The stock outpaced the S&P 500's daily gain of 0.22%.

- Zacks

Coming into today, shares of the used car dealership chain had lost 6.99% in the past month. In that same time, the Retail-Wholesale sector lost 4.13%, while the S&P 500 gained 1.86%.

KMX will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $1.76, down 1.68% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $6.7 billion, up 24.74% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $6.97 per share and revenue of $26.69 billion, which would represent changes of +54.2% and +40.82%, respectively, from the prior year.

It is also important to note the recent changes to analyst estimates for KMX. These revisions typically reflect the latest short-term business trends, which can change frequently. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. 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 3.57% higher. KMX is holding a Zacks Rank of #1 (Strong Buy) right now.

In terms of valuation, KMX is currently trading at a Forward P/E ratio of 18.02. This represents a discount compared to its industry's average Forward P/E of 18.43.

Investors should also note that KMX has a PEG ratio of 1.04 right now. 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. The Automotive - Retail and Wholesale - Parts industry currently had an average PEG ratio of 1.44 as of yesterday's close.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This group has a Zacks Industry Rank of 7, putting it in the top 3% of all 250+ industries.

The Zacks Industry Rank includes is listed in order from best to worst in terms of the average Zacks Rank of the individual companies within each of these sectors. 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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