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

Zacks Equity Research

CarMax (KMX) closed at $86.55 in the latest trading session, marking a +1.44% move from the prior day. This change outpaced the S&P 500's 0.29% gain on the day. Meanwhile, the Dow gained 0.17%, and the Nasdaq, a tech-heavy index, added 0.3%.

Coming into today, shares of the used car dealership chain had gained 1.87% in the past month. In that same time, the Retail-Wholesale sector gained 5.23%, while the S&P 500 gained 2.99%.

Wall Street will be looking for positivity from KMX as it approaches its next earnings report date. This is expected to be September 24, 2019. On that day, KMX is projected to report earnings of $1.33 per share, which would represent year-over-year growth of 7.26%. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $5.07 billion, up 6.28% from the year-ago period.

For the full year, our Zacks Consensus Estimates are projecting earnings of $5.26 per share and revenue of $19.61 billion, which would represent changes of +9.81% and +7.91%, respectively, from the prior year.

Any recent changes to analyst estimates for KMX should also be noted by investors. These recent revisions tend to reflect the evolving nature of short-term business trends. With this in mind, we can consider positive estimate revisions a sign of optimism about the company's business outlook.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. To benefit from this, we have developed the Zacks Rank, a proprietary model which takes these estimate changes into account and provides an actionable rating system.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. The Zacks Consensus EPS estimate has moved 0.12% lower within the past month. KMX is currently a Zacks Rank #3 (Hold).

Digging into valuation, KMX currently has a Forward P/E ratio of 16.23. This valuation marks a discount compared to its industry's average Forward P/E of 18.8.

Meanwhile, KMX's PEG ratio is currently 1.29. 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 1.54 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 103, putting it in the top 41% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

To follow KMX in the coming trading sessions, be sure to utilize Zacks.com.


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