CarMax Story

KMX -- USA Stock

USD 129.19 0.43 0.33%

Macroaxis Story

CarMax Inc is scheduled to announce its earnings tomorrow. The upcoming quarterly report is expected on the 1st of April 2021. CarMax Asset Turnover is fairly stable at the moment as compared to the past year. CarMax reported Asset Turnover of 0.90 in 2020. Current Ratio is likely to rise to 2.27 in 2021, whereas Net Income Per Employee is likely to drop slightly above 26.7 K in 2021. As many millenniums are trying to avoid consumer cyclical space, it makes sense to break down CarMax Inc a little further and try to understand its current market patterns.

Published over two weeks ago

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You think CarMax (NYSE:KMX) debt is an issue for investors?

This firm has 15.5 B in debt with debt to equity (D/E) ratio of 3.75, meaning that CarMax Inc heavily relies on borrowing funds for operations.

The asset utilization indicator refers to the revenue earned for every dollar of assets a company currently reports. CarMax has an asset utilization ratio of 137.48 percent. This suggests that the company is making $1.37 for each dollar of assets. An increasing asset utilization means that CarMax Inc is more efficient with each dollar of assets it utilizes for everyday operations.

You think CarMax (NYSE:KMX) debt is an issue for investors?

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

Exercise or conversion by Thomas Folliard of 185120 shares of CarMax subject to Rule 16b-3

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 exercise of stock options (right to buy) by Thomas Folliard, the corporate stakeholder, on 14th of April 2021. This event was filed by Carmax Inc with SEC on 2021-04-14. Statement of changes in beneficial ownership - SEC Form 4. Thomas Folliard currently serves as non-executive chairman of the board of CarMax Inc [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 it down

The company reported the last year's revenue of 19.88 B. Total Income to common stockholders was 751.91 M with profit before taxes, overhead, and interest of 3.18 B.

Asset Breakdown

17 B

Assets Non Current

3.7 B

Current Assets

	Total Assets	20.77 Billion
	Current Assets	3.73 Billion
	Assets Non Current	17.04 Billion
	Tax Assets	96.71 Million

Will CarMax investors exit after the slide?

Expected Short fall just dropped to -2.07, may suggest upcoming price depreciation. CarMax Inc has relatively low volatility with skewness of 0.98 and kurtosis of 2.37. 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. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure CarMax's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact CarMax's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Our Bottom Line On CarMax Inc

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. While some in two-three weeks oriented investors may not share our view, we believe it may not be a good time to buy new shares of CarMax.

About Contributor

Achuva Shats is a Member of Macroaxs Editorial Board. Achuva writes about retail product and service companies from the perspective of a regular consumer and sophisticated investor at the same time. She is passionate about corporate ethics and equality in the workforce View Profile

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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