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

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In the latest trading session, CarMax (KMX) closed at $98.63, marking a +1.4% move from the previous day. This change outpaced the S&P 500's 0.71% gain on the day. Elsewhere, the Dow gained 0.27%, while the tech-heavy Nasdaq added 0.14%.

Prior to today's trading, shares of the used car dealership chain had lost 9.39% over the past month. This has lagged the Retail-Wholesale sector's gain of 2.3% and the S&P 500's gain of 3.76% in that time.

Wall Street will be looking for positivity from CarMax as it approaches its next earnings report date. This is expected to be April 12, 2022. In that report, analysts expect CarMax to post earnings of $1.34 per share. This would mark year-over-year growth of 5.51%. Our most recent consensus estimate is calling for quarterly revenue of $7.59 billion, up 47.04% from the year-ago period.

Any recent changes to analyst estimates for CarMax should also be noted by investors. These revisions help to show the ever-changing nature of near-term business trends. 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. 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.

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 2.87% lower. CarMax is currently sporting a Zacks Rank of #4 (Sell).

In terms of valuation, CarMax is currently trading at a Forward P/E ratio of 13.7. Its industry sports an average Forward P/E of 16.99, so we one might conclude that CarMax is trading at a discount comparatively.

Meanwhile, KMX's PEG ratio is currently 0.86. 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. Automotive - Retail and Wholesale - Parts stocks are, on average, holding a PEG ratio of 1.41 based on yesterday's closing prices.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 199, which puts it in the bottom 22% 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.

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


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