CarMax, Inc. (KMX): Charged Up Insiders Buy Shares

CarMax, Inc. (NYSE:KMX) has been upgraded by Buckingham Research, which now rates the stock as Buy versus Neutral prior rating, according to a note issued on January 07. Analysts at Guggenheim, shed their negative views on December 24 by lifting it fromNeutral to Buy. Analysts at Wolfe Research, made their first call about the stock on October 02, recommending it is Peer Perform. Robert W. Baird analysts came out with bullish views on September 27 when the call was made. They think the stock is now Outperform compared to to their prior call for Neutral.

KMX stock dropped -0.43% in recent trade and currently has a stock-market value of $10.55B. The shares finished at $60.61, after trading as low as $59.93 earlier in the session. It hit an intraday high Thursday at $60.97. Trading activity significantly weakened as the volume at ready counter decreased to 1,452,197 shares versus 1,638,650 in average daily trading volume over the past 20 days. So far this year, the volume has averaged about 1,798,956 shares. The stock is now 9.72% above against its bear-market low of $55.24 on December 20, 2018. It has retreated -34.75% since it’s 52-week high of $81.67 reached in June. Now the market price is down -3.21% on the year and down -3.38% YTD.

Wall Street’s most bullish CarMax, Inc. (NYSE:KMX) analysts are predicting the share price to blow past $95 per share during the next 12 months. The current median share price forecast by them is $76, suggesting that the stock could increase 25.39% in that time frame. The average price target of $77.4 calls for a nearly 27.7% increase in the stock price.

CarMax, Inc. (KMX)’s 50 day simple moving average (SMA 50) price is $61.44 and its 200-day simple moving average (SMA 200) price is $68.91. The company’s stock currently has a total float of 169.18M shares. Its weekly volatility is hovering around 2.44% and felt 2.43% volatility in price over a month. On the upside, the share price will test short term resistance at around $61.08. On a downside, the stock is likely to find some support, which begins at $60.04. The failure to get near-term support could push it to $59.46.

When looking at valuations, CarMax, Inc. (KMX) has a cheap P/E of 13.78x as compared to industry average of 30.48x. Moreover, it trades for 12 times the next 12 months of expected earnings. Also, it is trading at rather expensive levels at just over 3.07x price/book and 0.59x price/sales. Compared to others, CarMax, Inc. is in a different league with regards to profitability, having net margins of 4.3%. To put some perspective around this, the industry’s average net margin is 3.35%. KMX’s ROE is 22.7%, which is also considerably better than the industry’s ROE of 12.59%. It’s also very liquid in the near term, with a current ratio of 2.5. The stock has a debt/capital of 4.04.

Shares of KMX have gained 7.3% since the company’s most recent earnings report. Over the past 12 fiscal quarters, CarMax, Inc. (NYSE:KMX) has topped consensus earnings estimates in 8 quarters (66%), missed earnings in 3 quarters (25%), whereas at 1 occasion EPS met analyst expectations. KMX last reported earnings that exceeded expectations. The company raked in $1.09 per share, -87.49% change on the same period last year. That was better than consensus for $1. Revenue for the recent quarter stood at $4.3 billion, up 5% on last year and below the $4.32 billion predicted by analysts. For this quarter, Wall Street analysts forecast revenue in a range of $5 billion to $5.2 billion, which should be compared with $0 generated last year. EPS is seen in a range of $1.4 to $1.5, against the $1.21 reported a year ago.