CarMax Story

<div class='circular--portrait' style='background:#FF6600;color: #FFFAFA;font-size:3em;'>KMX</div>
KMX -- USA Stock  

USD 90.95  0.47  0.51%

CarMax Inc is scheduled to announce its earnings today. The next earnings report is expected on the 18th of December 2020. CarMax Quick Ratio is fairly stable at the moment as compared to the past year. CarMax reported Quick Ratio of 0.16 in 2019. Net Current Assets as percentage of Total Assets is likely to rise to 14.04 in 2020, whereas Net Income Per Employee is likely to drop slightly above 28.4 K in 2020. As many passive investors are finally getting excited about consumer cyclical space, CarMax Inc could be a good starting point. We will analyze why CarMax investors may still consider a stake in the business.
Published over three weeks ago
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How much will CarMax owe in October?
The company has 15.41 B in debt with debt to equity (D/E) ratio of 4.31, demonstrating that the entity may be unable to create cash to meet all of its financial commitments. CarMax Inc has a current ratio of 2.79, demonstrating that it is liquid and is capable to disburse its financial commitments when the payables are due. Earning per share calculations of the firm is based on official Zacks consensus of 7 analysts regarding CarMax's future annual earnings. Given the historical accuracy of 63.45%, the future earnings per share of the company is estimated to be 2.9543 with the lowest and highest values of 2.65 and 3.28, respectively. Please note that this consensus of annual earnings estimates for CarMax Inc is an estimate of EPS before non-recurring items and including employee stock options expenses.
CarMax financial leverage ratio helps determine the effect of debt on the overall profitability of the company. It measures the total debt position of CarMax, including all of CarMax's outstanding debt obligations, and compares it with the equity. In simple terms, the high financial leverage means the cost of production, together with running the business day-to-day, is high, whereas, lower financial leverage implies lower fixed cost investment in the business and generally considered by investors to be a good sign. So if creditors own a majority of CarMax assets, the company is considered highly leveraged. Understanding the composition and structure of overall CarMax debt and outstanding corporate bonds gives a good idea of how risky the capital structure of a business is and if it is worth investing in it. Please read more on our technical analysis page.

Understanding CarMax Total Debt

CarMax Inc liabilities are broken down into two parts on the balance sheet. These are short-term (or current) obligations and long-term debt. CarMax Inc has to fulfill its short-term liabilities in this reporting year and should be no more than 12 months old. Long-term debt, on the other hand, is anything beyond the 12-month payment timeframe. Common short-term liabilities found on CarMax balance sheet include debt obligations and money owed to different CarMax vendors, workers, and loan providers. Below is the chart of CarMax main long-term debt accounts currently reported on its balance sheet.
You can use CarMax Inc financial leverage analysis tool to get a better grip on understanding its financial position

How important is CarMax's Liquidity

CarMax financial leverage refers to using borrowed capital as a funding source to finance CarMax Inc ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. CarMax financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between CarMax's total debt and its cash.

What do experts say?

Stock analysis is a method for investors and traders to make buying and selling decisions. By studying and evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. It is good to see analyst projects for CarMax, but it might be worth checking our own buy vs. sell analysis

Purchase by Mark ONeil of 2700 shares of CarMax

Legal trades by CarMax insiders are very common, as founders, directors, or employees of any publicly traded firm often have stock or stock options. These trades are made public in the United States through the filing of Form 4 of the Securities and Exchange Commission. Below entry was recorded recently and is publicly available as an insider trade:
CarMax insider trading alert for perchase of common stock by Mark ONeil, the corporate stakeholder, on 2nd of October 2020. This event was filed by Carmax Inc with SEC on 2020-10-02. Statement of changes in beneficial ownership - SEC Form 4 [view details]   
Note, although insider trading is legal, in the United States, Canada, Australia, and Germany, for mandatory reporting purposes, corporate insiders are defined as a company's officers, directors, and any beneficial owners of more than 10% of a class of the company's equity securities.

Breaking down CarMax Indicators

The current rise in CarMax short term price appreciation may raise some interest from investors. The stock closed today at a share price of 105.93 on slow start in trading volume. The company management teams have successfully maneuvered the firm at convenient times to take advantage of all market conditions in August. The stock standard deviation of daily returns for 30 days investing horizon is currently 1.59. The below-average Stock volatility is a good sign for longer-term investment options and for buy-and-hold investors.

Liabilities Breakdown

Current Liabilities
13.4 B
Long-Term Liabilities
Total Liabilities14.8 Billion
Current Liabilities1.35 Billion
Long-Term Liabilities13.45 Billion
Tax Liabilities1.7 Million

Will price continue to rise in October 2020?

Current value at risk indicator falls down to -2.56. Possible price jump? CarMax Inc has relatively low volatility with skewness of 0.27 and kurtosis of -0.03. However, we advise all investors to independently investigate CarMax Inc to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns.

Our Conclusion on CarMax

While other companies within the auto & truck dealerships industry are still a little expensive, even after the recent corrections, CarMax may offer a potential longer-term growth to investors. To summarize, as of the 24th of September 2020, our analysis shows that CarMax almost neglects market trends. The company is overvalued and projects below average probability of distress for the next 2 years. Our primary 30 days buy-sell recommendation on the company is Hold.

About Contributor

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Achuva Shats do not own shares of CarMax Inc. Please refer to our Terms of Use for any information regarding our disclosure principles.

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