KMX - Embedded Expectations Analysis - 2020 05 12
CarMax, Inc. (KMX:USA) currently trades near historical highs relative to UAFRS-based (Uniform) earnings, with a 42.2x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about the impact of COVID-19, market share growth, and their omnichannel selling strategySpecifically, management may have concerns about the further spread of COVID-19 in their communities, year-over-year sales declines, and their omnichannel strategy. Furthermore, they may lack confidence in their ability to grow comp market share, quickly move sales to an online platform, and ramp up their curbside pickup capabilities. Moreover, they may be overstating the competitive advantages of their footprint and logistics network, the ease of appointment-only operations, and the potential upside of their Customer Experience Centers (CEC)
CarMax is a holding company. Through its subsidiaries, the company is engaged as a retailer of used vehicles. The company operates in two segments: CarMax Sales Operations, which sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers; and CarMax Auto Finance, which consists of finance operation that provides vehicle financing to customer buying retail vehicles from the company The company's products and services include retail merchandising, wholesale auctions, extended protection plans, reconditioning and service, and customer credit.
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