Macroaxis provides advice on CarMax Inc to complement and cross-verify current
analyst consensus on CarMax Inc. Our investment recommendation engine determines the company's potential to grow exclusively from the perspective of an investor's current risk tolerance and investing horizon.
Typically, a company's
financial statements are the reports that show the
financial position of the company. There are three main documents that fall into the category of financial statements. These documents include CarMax income statement, its balance sheet, and the statement of cash flows. Potential CarMax investors and stakeholders use financial statements to determine how well the company is positioned to perform in the future. Although CarMax investors may use each financial statement separately, they are all related. The changes in CarMax's assets and liabilities, for example, are also reflected in the revenues and expenses that we see on CarMax's income statement, which results in the company's gains or losses. Cash flows can provide more information regarding cash listed on a balance sheet, but not equivalent to net income shown on the income statement. Please read more on our
technical analysis and
fundamental analysis pages.
The goal of CarMax
fundamental analysis is to do accurate financial forecasts. There are several possible objectives to fundamental analysis, such as projecting of CarMax performance into the future periods or doing a reasonable stock valuation. The intrinsic value of CarMax shares is the value that is considered the true value of the share. If
the intrinsic value of CarMax is higher than its market price, buying is generally recommended. If it is equal to the market price, it is recommended to hold; and if it is less than the market price, then one should sell all shares CarMax. Please read more on our
fundamental analysis page.
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. Financial leverage can amplify the potential profits to CarMax's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of CarMax's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the
breakdown between CarMax's total debt and its cash.
Breaking it down
Institutional investor usually refers to an organization that invests money in CarMax on behalf of clients or other money managers. Buying and selling of large positions of CarMax stock by institutional investors can create supply and demand imbalances that result in sudden price moves of CarMax stock. Let's take a look at how the ownership of CarMax is distributed among investors.
Ownership Allocation
CarMax holds a total of one hundred sixty-one million eight hundred seventy thousand
outstanding shares. The majority of CarMax Inc
outstanding shares are owned by
other corporate entities. These outside corporations are usually referred to as non-private investors looking to acquire positions in CarMax Inc to benefit from reduced commissions. Consequently, institutional investors are subject to a different set of regulations than regular investors in CarMax. Please pay attention to any change in the institutional holdings of CarMax Inc as this could imply that something significant has changed or about to change at the company. Please note that no matter how much assets the company secures, if the real value of the firm is less than the current market value, you may not be able to make money on it.
| Retail Investors | 2.56 |
| Insiders | 0.31 |
| Institutions | 97.13 |
| 2018 | 2019 | 2021 | 2022 (projected) |
Consolidated Income | 842.41 M | 746.92 M | 888.43 M | 834.09 M | Direct Expenses | 15.69 B | 16.57 B | 17.6 B | 14.42 B |
Asset Utilization
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 211.83 percent. This suggests that the company is making $2.12 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.
| Current Assets | 3.6 Billion | 17.94 |
| Assets Non Current | 16.34 Billion | 81.54 |
| Goodwill | 584,263 | 0.002916 |
| Tax Assets | 102.93 Million | 0.51 |
CarMax implied volatility may change after the rise
Current maximum drawdown is at 10.24. CarMax Inc exhibits very low volatility with skewness of 0.29 and kurtosis of -0.56. However, we advise investors to further study CarMax Inc technical indicators to make sure all market info is available and is reliable. 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.
CarMax Implied Volatility
CarMax's implied volatility exposes the market's sentiment of CarMax Inc stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if CarMax's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that CarMax stock will not fluctuate a lot when CarMax's options are near their expiration.
The Bottom Line
While many of the other players in the auto & truck dealerships industry are either recovering or due for a correction, CarMax may not be as strong as the others in terms of longer-term growth potentials. While some investors may not share our view, we believe it may be a good time to increase your existing holdings in CarMax as the risk-reward trade off is appealing enough to hold a position. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to CarMax.
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Raphi Shpitalnik is a Junior Member of Macroaxis Editorial Board. Raphael is a young entrepreneur who joined Macroaxis on a part-time basis at the beginning of the pandemic and eventually acquired a real taste for investing and fintech. He likes to analyze different equity instruments across a wide range of industries, focusing primarily on consumer products, sports, fintech, cannabis, and AI.
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 Raphi Shpitalnik do not own shares of CarMax Inc. Please refer to our
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