CarMax (NYSE:KMX) Now Covered by Bank of America

Key Points

• Bank of America initiated coverage on CarMax with an "underperform"/Sell rating and a $40.00 price target, implying roughly a 1.6% downside from the stock's current level.
• CarMax's adjusted Q4 results beat estimates (EPS $0.34; revenue $5.95B) but the company posted a GAAP loss after a goodwill impairment and faces margin compression from price cuts and higher credit provisions.
• Shares fell about 2.4% to ~$40.65 as analyst downgrades weighed, even as large institutions (SRS, AQR, Norges Bank) materially increased or initiated positions in the stock.

Analysts at Bank of America assumed coverage on shares of CarMax (NYSE:KMX - Get Free Report) in a report issued on Wednesday. The firm set an "underperform" rating and a $40.00 price target on the stock. Bank of America's price objective would indicate a potential downside of 1.59% from the stock's current price.

KMX has been the topic of several other research reports. Zacks Research upgraded CarMax from a "strong sell" rating to a "hold" rating in a research report on Monday, January 5th. JPMorgan Chase & Co. reduced their price target on CarMax from $30.00 to $28.00 and set an "underweight" rating for the company in a research report on Friday, December 19th. Weiss Ratings restated a "sell (d)" rating on shares of CarMax in a research report on Wednesday, April 8th. Benchmark restated a "hold" rating on shares of CarMax in a research report on Tuesday, December 16th. Finally, Stephens upped their price objective on CarMax from $39.00 to $43.00 and gave the stock an "equal weight" rating in a research note on Thursday, April 2nd. One analyst has rated the stock with a Buy rating, twelve have issued a Hold rating and five have given a Sell rating to the stock. Based on data from MarketBeat, CarMax has an average rating of "Reduce" and a consensus target price of $40.86.

CarMax Stock Down 2.4%

Shares of KMX stock traded down $1.01 during mid-day trading on Wednesday, hitting $40.65. The company's stock had a trading volume of 289,951 shares, compared to its average volume of 3,495,302. CarMax has a 52-week low of $30.26 and a 52-week high of $71.99. The business has a 50-day moving average price of $43.00 and a 200 day moving average price of $41.98. The company has a debt-to-equity ratio of 2.74, a quick ratio of 0.51 and a current ratio of 1.99. The stock has a market cap of $5.76 billion, a price-to-earnings ratio of 13.35, a PEG ratio of 1.29 and a beta of 1.30.

CarMax (NYSE:KMX - Get Free Report) last posted its quarterly earnings data on Tuesday, April 14th. The company reported $0.34 EPS for the quarter, beating analysts' consensus estimates of $0.18 by $0.16. The company had revenue of $5.95 billion during the quarter, compared to analysts' expectations of $5.65 billion. CarMax had a return on equity of 7.72% and a net margin of 1.77%.CarMax's revenue for the quarter was down 1.0% compared to the same quarter last year. During the same quarter in the prior year, the business earned $0.58 earnings per share. Research analysts predict that CarMax will post 3.23 EPS for the current fiscal year.

Institutional Trading of CarMax

A number of institutional investors have recently bought and sold shares of KMX. SRS Investment Management LLC lifted its position in CarMax by 1,717.5% in the fourth quarter. SRS Investment Management LLC now owns 5,637,803 shares of the company's stock worth $217,845,000 after buying an additional 5,327,603 shares during the last quarter. AQR Capital Management LLC lifted its stake in shares of CarMax by 151.8% during the 4th quarter. AQR Capital Management LLC now owns 7,930,345 shares of the company's stock worth $306,429,000 after acquiring an additional 4,780,903 shares during the last quarter. Norges Bank bought a new stake in shares of CarMax during the 4th quarter worth approximately $159,232,000. Arrowstreet Capital Limited Partnership lifted its stake in shares of CarMax by 73.7% during the 3rd quarter. Arrowstreet Capital Limited Partnership now owns 3,522,923 shares of the company's stock worth $158,074,000 after acquiring an additional 1,494,205 shares during the last quarter. Finally, Vulcan Value Partners LLC lifted its stake in shares of CarMax by 135.2% during the 3rd quarter. Vulcan Value Partners LLC now owns 2,328,120 shares of the company's stock worth $104,569,000 after acquiring an additional 1,338,134 shares during the last quarter.

CarMax News Summary

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Adjusted Q4 results beat consensus — CarMax reported adjusted EPS of $0.34 and revenue of $5.95B, topping Street estimates and showing demand that still supports topline. CarMax Press Release
• Positive Sentiment: New CEO + strategic tech focus — Management highlighted a new CEO (Keith Barr) and a push to invest in technology to streamline the buying/selling experience, which could improve customer acquisition and margins over time if execution succeeds. CarMax Bets on Tech to Streamline Used Car Buying Journey
• Neutral Sentiment: Full materials/transcript available for due diligence — The earnings slide deck and call transcript are published for investors to review management’s detail on unit trends, margins and reserve methodology. Earnings Call Transcript
• Negative Sentiment: Price cuts have compressed vehicle margins — Management implemented price reductions to stimulate demand; gross profit per retail used unit declined materially, weighing on profitability and investor confidence. CarMax posts quarterly loss on goodwill charge, weak used-car demand
• Negative Sentiment: GAAP loss and one-time charges highlighted near-term weakness — The quarter included a goodwill impairment that produced a GAAP loss despite positive adjusted results, increasing uncertainty about asset valuations and near-term earnings. CarMax (KMX) Stock Plunges 13% on Quarterly Loss and Margin Erosion
• Negative Sentiment: Credit provisioning and finance-segment pressure — Higher provisions for loan losses were flagged as a near-term drag on results, which amplifies earnings volatility while reserves are rebuilt. QuiverQuant Analysis
• Negative Sentiment: Analyst downgrades and a new sell initiation increase downside pressure — Bank of America initiated a Sell citing margin compression and demand headwinds; other firms reiterated cautious or underweight views and lowered targets, amplifying selling. BofA Sell Rating

CarMax Company Profile

CarMax NYSE: KMX is a leading retailer of used vehicles in the United States, offering customers a streamlined, no-haggle purchasing experience. The company's inventory spans a broad range of makes and models, each of which undergoes a comprehensive inspection process before being offered for sale. Customers can shop in person at CarMax's retail locations or browse the company's online platform, which provides detailed vehicle histories, virtual tours and contactless purchasing options.

Originally launched in 1993 as a division of Circuit City, CarMax became an independent, publicly traded company in 1997.

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