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

Zacks Equity Research

CarMax (KMX) closed at $83.17 in the latest trading session, marking a -0.2% move from the prior day. This change lagged the S&P 500's 0.83% gain on the day. Elsewhere, the Dow gained 0.93%, while the tech-heavy Nasdaq added 0.9%.

Heading into today, shares of the used car dealership chain had lost 3.36% over the past month, lagging the Retail-Wholesale sector's loss of 2.72% and the S&P 500's loss of 2.38% in that time.

Investors will be hoping for strength from KMX as it approaches its next earnings release. The company is expected to report EPS of $1.33, up 7.26% from the prior-year quarter. Meanwhile, our latest consensus estimate is calling for revenue of $5.07 billion, up 6.28% from the prior-year quarter.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $5.26 per share and revenue of $19.62 billion. These totals would mark changes of +9.81% and +7.96%, respectively, from last year.

Investors might also notice recent changes to analyst estimates for KMX. Recent revisions tend to reflect the latest near-term business trends. As such, positive estimate revisions reflect analyst optimism about the company's business and profitability.

Research indicates that these estimate revisions are directly correlated with near-term share price momentum. 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 0.09% lower. KMX is currently a Zacks Rank #3 (Hold).

Valuation is also important, so investors should note that KMX has a Forward P/E ratio of 15.83 right now. This represents a discount compared to its industry's average Forward P/E of 17.22.

Investors should also note that KMX has a PEG ratio of 1.26 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. The Automotive - Retail and Wholesale - Parts was holding an average PEG ratio of 1.45 at yesterday's closing price.

The Automotive - Retail and Wholesale - Parts industry is part of the Retail-Wholesale sector. This industry currently has a Zacks Industry Rank of 69, which puts it in the top 27% 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.

Be sure to follow all of these stock-moving metrics, and many more, on Zacks.com.

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