CarMax, Inc.
CarMax, Inc. Fundamental Analysis
CarMax, Inc. (KMX) shows weak financial fundamentals with a PE ratio of 13.63, profit margin of 1.65%, and ROE of 7.39%. The company generates $27.4B in annual revenue with weak year-over-year growth of -10.61%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 23.0/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze KMX's fundamental strength across five key dimensions:
Efficiency Score
WeakKMX struggles to generate sufficient returns from assets.
Valuation Score
ExcellentKMX trades at attractive valuation levels.
Growth Score
WeakKMX faces weak or negative growth trends.
Financial Health Score
ModerateKMX shows balanced financial health with some risks.
Profitability Score
WeakKMX struggles to sustain strong margins.
Key Financial Metrics
Is KMX Expensive or Cheap?
P/E Ratio
KMX trades at 13.63 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, KMX's PEG of -1.22 indicates potential undervaluation.
Price to Book
The market values CarMax, Inc. at 1.03 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at -9.69 times EBITDA. This is generally considered low.
How Well Does KMX Make Money?
Net Profit Margin
For every $100 in sales, CarMax, Inc. keeps $1.65 as profit after all expenses.
Operating Margin
Core operations generate 2.50 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $7.39 in profit for every $100 of shareholder equity.
ROA
CarMax, Inc. generates $1.79 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
CarMax, Inc. generates limited operating cash flow of $2.45B, signaling weaker underlying cash strength.
Free Cash Flow
CarMax, Inc. produces free cash flow of $1.92B, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $13.08 in free cash annually.
FCF Yield
KMX converts 31.74% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
13.63
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-1.22
vs 25 benchmark
P/B Ratio
Price to book value ratio
1.03
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.22
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
2.75
vs 25 benchmark
Current Ratio
Current assets to current liabilities
1.99
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.07
vs 25 benchmark
ROA
Return on assets percentage
0.02
vs 25 benchmark
ROCE
Return on capital employed
0.03
vs 25 benchmark
How KMX Stacks Against Its Sector Peers
| Metric | KMX Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 13.63 | 23.83 | Better (Cheaper) |
| ROE | 7.39% | 1168.00% | Weak |
| Net Margin | 1.65% | -2376.00% (disorted) | Weak |
| Debt/Equity | 2.75 | 0.74 | Weak (High Leverage) |
| Current Ratio | 1.99 | 2.57 | Neutral |
| ROA | 1.79% | -34556.00% (disorted) | Weak |
KMX outperforms its industry in 1 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews CarMax, Inc.'s 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
61.01%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
-37.27%
Industry Style: Cyclical, Growth, Discretionary
DecliningFCF CAGR
210.31%
Industry Style: Cyclical, Growth, Discretionary
High Growth