CarMax Inc (KMX): A Deep Dive into Financial Metrics and Competitive Strengths
CarMax Inc (NYSE:KMX) has recently been in the spotlight, drawing interest from investors and financial analysts due to its robust financial stance. With shares currently priced at $69.54, CarMax Inc has witnessed a daily loss of 0.29%, marked against a three-month change of -15.36%. A thorough analysis, underlined by the GF Score, suggests that CarMax Inc is well-positioned for substantial growth in the near future.
Understanding the GF Score
The GF Score is a stock performance ranking system developed by GuruFocus using five aspects of valuation, which has been found to be closely correlated to the long-term performances of stocks by backtesting from 2006 to 2021. The stocks with a higher GF Score generally generate higher returns than those with a lower GF Score. Therefore, when picking stocks, investors should invest in companies with high GF Scores. The GF Score ranges from 0 to 100, with 100 as the highest rank.
CarMax Inc's GF Score components are as follows:
Financial strength rank: 4/10
Profitability rank: 8/10
Growth rank: 10/10
GF Value rank: 9/10
Momentum rank: 9/10
Each one of these components is ranked and the ranks also have positive correlation with the long term performances of stocks. The GF score is calculated using the five key aspects of analysis. Through backtesting, we know that each of these key aspects has a different impact on the stock price performance. Thus, they are weighted differently when calculating the total score. With a high growth rank and a slightly lower financial strength rank, GuruFocus assigned CarMax Inc the GF Score of 92 out of 100, which signals the highest outperformance potential.
CarMax Inc Business Overview
CarMax Inc, with a market cap of $11.03 billion, is a leading player in the used and new car sales, financing, and services sector. The company operates through a chain of about 240 used retail stores. Formed in 1993 as a unit of Circuit City, it spun off into an independent company in late 2002. Used-vehicle sales typically account for about 83% of revenue, with the remaining portion composed of extended service plans and repair. In fiscal 2023, the company retailed and wholesaled 807,823, and 585,071 used vehicles, respectively. Despite being the largest used-vehicle retailer in the U.S., CarMax Inc estimates that it has only about 4% U.S. market share of vehicles 0-10 years old in 2022. It seeks over 5% share by the end of calendar 2025. CarMax Inc is based in Richmond, Virginia.
Profitability Rank Breakdown
The Profitability Rank shows CarMax Inc's impressive standing among its peers in generating profit. CarMax Inc's strong Predictability Rank of 3.5 stars out of five underscores its consistent operational performance, providing investors with increased confidence.
Growth Rank Breakdown
Ranked highly in Growth, CarMax Inc demonstrates a strong commitment to expanding its business. The company's 3-Year Revenue Growth Rate is 15.1%, which outperforms better than 75.35% of 1201 companies in the Vehicles & Parts industry.
Conclusion
Considering the company's financial strength, profitability, and growth metrics, the GF Score highlights CarMax Inc's unparalleled position for potential outperformance. This makes it a compelling choice for investors seeking robust returns. GuruFocus Premium members can find more companies with strong GF Scores using the following screener link: GF Score Screen
This article first appeared on GuruFocus.
