This story originally appeared on Zacks
CarMax (KMX) closed the most recent trading day at $108.48, moving -1.91% from the previous trading session. This change lagged the S&P 500’s daily loss of 1.9%. Elsewhere, the Dow lost 1.43%, while the tech-heavy Nasdaq added 0.06%.
Heading into today, shares of the used car dealership chain had lost 5.86% over the past month, lagging the Retail-Wholesale sector’s loss of 2.93% and the S&P 500’s loss of 3.39% in that time.
CarMax will be looking to display strength as it nears its next earnings release. In that report, analysts expect CarMax to post earnings of $1.42 per share. This would mark year-over-year growth of 11.81%. Our most recent consensus estimate is calling for quarterly revenue of $7.86 billion, up 52.21% from the year-ago period.
Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $7.40 per share and revenue of $31.85 billion. These totals would mark changes of +63.72% and +68.06%, respectively, from last year.
Investors should also note any recent changes to analyst estimates for CarMax. 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. 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.
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. Over the past month, the Zacks Consensus EPS estimate has moved 0.91% higher. CarMax is holding a Zacks Rank of #3 (Hold) right now.
In terms of valuation, CarMax is currently trading at a Forward P/E ratio of 14.95. For comparison, its industry has an average Forward P/E of 17.4, which means CarMax is trading at a discount to the group.
Investors should also note that KMX has a PEG ratio of 0.94 right now. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company’s expected earnings growth rate. KMX’s industry had an average PEG ratio of 1.34 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 101, putting it in the top 40% 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.
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