CarMax (KMX) vs. The Competition Critical Contrast

CarMax (NYSE: KMX) is one of 20 publicly-traded companies in the “Automotive dealers & gasoline service stations” industry, but how does it weigh in compared to its rivals? We will compare CarMax to similar companies based on the strength of its profitability, earnings, valuation, dividends, institutional ownership, risk and analyst recommendations.

Insider & Institutional Ownership

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64.7% of shares of all “Automotive dealers & gasoline service stations” companies are owned by institutional investors. 1.7% of CarMax shares are owned by insiders. Comparatively, 15.7% of shares of all “Automotive dealers & gasoline service stations” companies are owned by insiders. Strong institutional ownership is an indication that hedge funds, large money managers and endowments believe a company is poised for long-term growth.

Earnings & Valuation

This table compares CarMax and its rivals top-line revenue, earnings per share and valuation.

Gross Revenue Net Income Price/Earnings Ratio
CarMax $17.12 billion $664.11 million 16.68
CarMax Competitors $8.01 billion $220.42 million 12.20

CarMax has higher revenue and earnings than its rivals. CarMax is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Volatility and Risk

CarMax has a beta of 1.55, meaning that its share price is 55% more volatile than the S&P 500. Comparatively, CarMax’s rivals have a beta of 9.98, meaning that their average share price is 898% more volatile than the S&P 500.

Profitability

This table compares CarMax and its rivals’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CarMax 3.88% 21.09% 4.02%
CarMax Competitors 3.22% 33.52% 3.60%

Analyst Ratings

This is a summary of recent ratings and recommmendations for CarMax and its rivals, as provided by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CarMax 0 5 12 0 2.71
CarMax Competitors 115 614 664 28 2.43

CarMax currently has a consensus target price of $79.00, indicating a potential upside of 27.99%. As a group, “Automotive dealers & gasoline service stations” companies have a potential upside of 17.40%. Given CarMax’s stronger consensus rating and higher possible upside, equities analysts plainly believe CarMax is more favorable than its rivals.

Summary

CarMax beats its rivals on 8 of the 13 factors compared.

About CarMax

CarMax Inc., through its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates in two segments, CarMax Sales Operations and CarMax Auto Finance. It offers customers a range of makes and models of used vehicles, including domestic and imported vehicles; sells vehicles that do not meet its retail standards to licensed dealers through on-site wholesale auctions; and provides extended protection plans to customers at the time of sale. The company also offers reconditioning and vehicle repair services; and provides financing alternatives for retail customers across a range of credit spectrum through its CarMax Auto Finance and arrangements with various financial institutions. In addition, it sells new vehicles under franchise agreements. As of December 21, 2017, the company operated 185 used car stores in 39 states. CarMax Inc. was founded in 1993 and is based in Richmond, Virginia.

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