CarMax, Inc. (NYSE:KMX) Given Consensus Recommendation of "Reduce" by Analysts

Key Points

• Analysts collectively rate CarMax “Reduce.” Of 20 analysts, 15 recommend holding the stock, three rate it a sell and two recommend buying; the average 12-month price target is $51.67, below its $57.97 opening price.
• CarMax plans to eliminate approximately 145 corporate positions, or 4% of its corporate workforce, in its third workforce reduction in about a year as it seeks cost savings amid a soft auto market and ongoing turnaround efforts.
• Investors are focused on the company’s fiscal second-quarter report, expected September 29, with consensus estimates calling for roughly $0.70 in EPS and $6.94 billion in revenue; some analysts have raised price targets, although valuation and execution risks remain.

Shares of CarMax, Inc. (NYSE:KMX - Get Free Report) have received a consensus rating of "Reduce" from the twenty research firms that are covering the stock, MarketBeat Ratings reports. Three analysts have rated the stock with a sell rating, fifteen have assigned a hold rating and two have issued a buy rating on the company. The average 12-month price target among brokers that have covered the stock in the last year is $51.6667.

A number of brokerages have commented on KMX. Stephens raised CarMax from an "equal weight" rating to an "overweight" rating and set a $66.00 price target for the company in a research report on Thursday, June 18th. Barclays raised CarMax from an "underweight" rating to an "equal weight" rating and increased their price objective for the company from $37.00 to $61.00 in a report on Tuesday, July 21st. Truist Financial lifted their price objective on shares of CarMax from $47.00 to $50.00 and gave the company a "hold" rating in a research note on Thursday, June 18th. Bank of America upped their price objective on shares of CarMax from $40.00 to $45.00 and gave the company an "underperform" rating in a report on Wednesday, June 17th. Finally, Mizuho increased their price objective on shares of CarMax from $38.00 to $43.00 and gave the stock a "neutral" rating in a research note on Thursday, June 18th.

Trending Headlines about CarMax

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: CarMax announced plans to eliminate approximately 145 corporate positions, or about 4% of its corporate workforce. Management said the restructuring is intended to help the company operate more efficiently, move faster and improve alignment across teams. The cost reductions could support profitability as the company works through a turnaround. CarMax Cuts 145 Corporate Jobs in Third Layoff Round in 11 Months
• Positive Sentiment: Some Wall Street forecasters have recently raised their price targets ahead of CarMax’s fiscal second-quarter results, suggesting expectations for improved performance despite generally neutral analyst ratings. Top Wall Street Forecasters Revamp CarMax Expectations Ahead Of Q2 Earnings
• Neutral Sentiment: CarMax is expected to report fiscal second-quarter earnings before the market opens on Sept. 29. The current consensus outlook calls for earnings per share of approximately $0.70 and revenue of about $6.94 billion, both above the year-ago period. CarMax Q2 Earnings Expectations
• Negative Sentiment: The layoffs represent CarMax’s third workforce reduction in roughly 12 months and come amid a soft auto market, highlighting continued pressure on demand and the need for a turnaround under CEO Keith Barr. CarMax Cuts Jobs for Third Time in 12 Months Amid Soft Auto Market
• Negative Sentiment: One earnings preview argues that CarMax’s share price has risen faster than the underlying business, raising valuation concerns ahead of the results and increasing the risk of disappointment if earnings or guidance fall short. CarMax Earnings Preview

CarMax Trading Up 1.3%

NYSE KMX opened at $57.97 on Tuesday. The company has a fifty day simple moving average of $59.56 and a two-hundred day simple moving average of $49.56. The stock has a market cap of $8.23 billion, a P/E ratio of 37.89, a P/E/G ratio of 2.64 and a beta of 1.17. CarMax has a 12-month low of $30.26 and a 12-month high of $65.28. The company has a current ratio of 2.70, a quick ratio of 0.82 and a debt-to-equity ratio of 2.87.

Insider Buying and Selling

In related news, Director Sona Chawla purchased 2,000 shares of the business's stock in a transaction on Thursday, June 25th. The shares were bought at an average cost of $53.39 per share, with a total value of $106,780.00. Following the transaction, the director owned 21,702 shares of the company's stock, valued at approximately $1,158,669.78. This trade represents a 10.15% increase in their ownership of the stock. The acquisition was disclosed in a filing with the Securities & Exchange Commission, which is accessible through this hyperlink. Insiders own 1.01% of the company's stock.

Institutional Trading of CarMax

A number of hedge funds have recently modified their holdings of KMX. Jupiter Topco LLC purchased a new position in CarMax during the second quarter valued at approximately $245,676,000. Primecap Management Co. CA purchased a new stake in CarMax in the 2nd quarter worth approximately $230,548,000. Norges Bank purchased a new stake in CarMax in the 4th quarter worth approximately $159,232,000. The Manufacturers Life Insurance Company acquired a new stake in shares of CarMax during the 2nd quarter worth approximately $128,001,000. Finally, Canada Pension Plan Investment Board acquired a new stake in shares of CarMax during the 2nd quarter worth approximately $115,465,000.

About CarMax

CarMax, Inc is a specialty retailer of used vehicles and one of the largest automotive retailers in the United States. The company sells a broad selection of used cars, trucks and sport utility vehicles through its retail locations and online platform. CarMax also purchases vehicles from consumers and other sources, providing customers with a streamlined alternative to traditional private-party sales.

In addition to retail sales, CarMax operates wholesale vehicle auctions for vehicles that do not meet its retail standards or business requirements.

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