KMX - Embedded Expectations Analysis - 2020 11 20
CarMax, Inc. (KMX:USA) currently trades above corporate averages relative to UAFRS-based (Uniform) earnings, with a 35.4x Uniform P/E. At these levels, the market has bullish expectations for the firm, but management may be concerned about pricing, used unit sales, and their general value propositionSpecifically, management may lack confidence in their ability to improve used unit comp growth and sustain price levels through digital auctions. They may also have concerns about traditional auctions not opening back up, the potential of their photo studios, and the capabilities of their customer hub. Moreover, management may lack confidence in their ability to remain competitive in the market, upgrade the content on their website, and benefit from investments in other parts of the business. Finally, they may have concerns about the impact of mix shift related to older vehicles sales
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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