Stock on Watch: CarMax Inc. (KMX)

Company Profile:

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. 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.

Recent News:

For the fourth quarter ended February 28, 2018, the company reported net earnings declined 20.0% to $122.1 million and net earnings per diluted share declined 17.3% to $0.67.

Fiscal year ended February 28, 2018, the company reported net earnings increased 5.9% to $664.1 million and net earnings per diluted share increased 10.4% to $3.60.

 

Fundamental Analysis:

Ninestocks analyzes several different financial aspects: Growth, Profitability, solvency and efficiency.

Growth – Measures the growth of both the company’s income statement and cash flow.

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Profitability – Measures the historical price movement of the stock.

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Solvency – Measures the solvency of the company based on several ratios.

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Efficiency – Measures the strength and historic growth of a company’s return on invested capital.

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Conclusion:

KMX’s strengths can be seen in its better growth, better profitability and strong efficiency compared with its peers. Its revenue and net income have increased over recent several years. Technical indicators signal the bullish signs, as there is a bullish crossover in MACD and Stochastic Oscillator. RSI(14) stands at 51.20 with positive bias. We rate CarMax Inc. (KMX) a STRONG BUY.

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