CarMax, Inc.
$46.03
-1.9%CarMax, Inc., together with its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates through two segments, CarMax Sales Operations and CarMax Auto Finance. It offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; and extended protection plans to customers at the time of sale, as well as sells vehicles that are approximately 10 years old and has more than 100,000 miles through wholesale auctions. The company also provides reconditioning and vehicle repair services; and financing alternatives for retail customers across a range of credit spectrum through its CarMax Auto Finance and arrangements with various financial institutions. As of February 28, 2022, it operated approximately 230 used car stores. CarMax, Inc. was founded in 1993 and is based in Richmond, Virginia.
At a Glance
Live SnapshotIntrinsic Alpha Methodology
Thesis Lenses
Signal
High confidenceValuation multiple is elevated (P/E 27.4).
Valuation inputs: P/E 27.4, earnings yield +3.6%, momentum -1.9%.
If multiples stay elevated while momentum fades, downside repricing risk rises.
Driver
High confidenceReturn profile is soft (ROE +4.2%, ROIC -1.1%).
Profitability stack: net margin +1.0%, ROE +4.2%, ROIC -1.1%.
Quality deterioration often appears in margins before it shows up in headline EPS.
Risk
High confidenceDownside profile is elevated and scenario stress-testing is essential.
Risk factors: liabilities/assets +77.7%, momentum -1.9%, net margin +1.0%.
Higher leverage with weak momentum and thin margins can amplify drawdown severity.
CarMax, Inc. Market vs Earnings Trajectory
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CarMax, Inc. Fair Value Envelope
CarMax, Inc. Profit Bridge
Profitability Analysis
Gross Margin
Thin margins leave little room for error. Cost management and pricing strategy are critical.
Operating Margin
Operating losses indicate the core business is unprofitable. Requires restructuring or revenue growth.
Net Profit Margin
Minimal profitability after all expenses. Limited financial flexibility for reinvestment or shareholder returns.
Effective Tax Rate
Higher tax burden may reflect limited tax optimization or operations in high-tax jurisdictions.
CarMax, Inc. Cash Conversion Engine
Cash Flow Quality Analysis
FCF Conversion Rate
Excellent cash generation. The company converts earnings to cash at or above 100%, indicating high-quality earnings.
CapEx Intensity
Moderate capital requirements typical of many stable businesses. Healthy balance between reinvestment and cash generation.
FCF Growth Trend
Strong FCF growth demonstrates improving cash generation and business momentum. Positive signal for sustainability.
Working Capital Impact
Moderate working capital outflow. Typical for growing businesses, but ensure it's supporting revenue growth, not inefficiency.
Cash Flow Quality Insight
Exceptional cash generation: High-quality earnings converting to growing free cash flow. The company demonstrates strong pricing power, efficient operations, and disciplined capital allocation.
CarMax, Inc. Funding & Solvency Profile
Financial Health Analysis
Current Ratio
Excellent liquidity position. The company can easily cover its short-term obligations with substantial cushion.
Debt-to-Equity Ratio
High financial leverage. Heavy reliance on debt may indicate increased financial risk and potential solvency concerns.
Working Capital
Strong working capital position provides significant operational flexibility and financial cushion.
Asset Composition
Capital-intensive business with significant long-term investments in property, equipment, or intangibles.
Financial Health Insight
Mixed signals: Strong short-term liquidity provides comfort, but high overall leverage requires careful monitoring of debt servicing capabilities and refinancing risk.
CarMax, Inc. Street Expectations Map
Wall Street analysts project that KMX stock may decline over the coming 12 months. The consensus 1-year price target stands at 38.20, with estimates ranging from a low of 26.00 to a high of 48.00.
The consensus 1-year price target stands at 38.20, with estimates ranging from a low of 26.00 to a high of 48.00.
Analyst Consensus Analysis
Upside Potential
Significant downside risk. Stock trading well above analyst consensus suggests elevated valuation concerns and potential correction.
Analyst Agreement
Mixed analyst views. Wide target range suggests differing opinions on key value drivers, growth prospects, or risk factors.
Risk-Reward Profile
Unfavorable risk-reward. Downside risk exceeds upside potential. Consider defensive positioning or alternative opportunities.
Analyst Conviction
Bearish or uncertain outlook. Limited upside or poor consensus suggests challenges ahead or fundamental concerns.
Market Sentiment Insight
Monitor and evaluate: Current analyst consensus suggests limited conviction or near-term catalysts. Stay informed on company developments and reassess positioning as new information emerges.
CarMax, Inc. Insider Positioning
During the last 12 months, insiders have purchased $591K and sold $109K worth of KMX shares, resulting in $482K of net buying activity.
3 Months
0
0.00
0
0.00
+0
+$0
3-6 Months
0
0.00
0
0.00
+0
+$0
6-9 Months
12.8K
590.95K
0
0.00
+591K
+$591K
9-12 Months
0
0.00
1.5K
108.78K
-109K
-$109K
Top Buyers
Oneil Mark F
Director
$500K
Steenrod Mitchell D
Director
$91K
Top Sellers
Daniels Jon G
Officer: Evp, Caf
$109K
Insider Activity Analysis
Net Insider Sentiment
Strong bullish signal with $482K net buying. Insiders are aggressively accumulating shares, suggesting significant confidence in future prospects.
Buy/Sell Ratio
Exceptional buy/sell ratio. Buying dramatically outweighs selling—one of the strongest possible insider signals.
Insider Participation
2 insider buyers vs. 1 sellers. More insiders buying than selling indicates positive sentiment.
Insider Activity Insight
Compelling insider conviction: The combination of strong buy/sell ratio and multiple buyers suggests insiders see attractive risk/reward. Consider this alongside fundamental analysis for confirmation.
No Dividend Yield Data
KMX has not reported any dividend yield values in the available annual periods.
kmx Dividend History
Learning Layer
Related Guides
Build conviction on KMX by pairing this stock hub with focused valuation guides.
Research Paths
Snapshot
Start with context, operating signals, and key market metrics.
Value Model
Stress test fair value across bear, base, and bull assumptions.
Statements
Validate revenue quality, margins, and balance sheet durability.
Earnings Call
Read management commentary and compare it with reported outcomes.
Dividends
Check payout sustainability and long-term distribution behavior.
Analyst Expectations
Review consensus spread and where estimate risk is concentrated.