CarMax Inc. purchase, recondition, and sell used vehicles in its superstores and franchises throughout the United States. The company was founded in 2006 and is based in Carmel, Indiana.
KMX Price Forecast Based on DCF Valuation
DCF Fair Value Target:
We started the process of determining a valid price forecast for Carmax Inc with a discounted cash flow analysis -- the results of which can be found in the table below. To summarize, we found that Carmax Inc ranked in the 3th percentile in terms of potential gain offered. Our DCF analysis suggests the stock is overvalued by about 99%. In terms of the factors that were most noteworthy in this DCF analysis for KMX, they are:
Its compound free cash flow growth rate, as measured over the past 0.26 years, is -0.56% -- higher than merely 1.76% of stocks in our DCF forecasting set.
KMX's estimated cost of debt, based largely on its market capitalization and its interest coverage ratio, is 2%; for context, that number is higher than just 1.2% of tickers in our DCF set.
The weighted average cost of capital for the company is 6. This value is greater than just 1.8% stocks in the Consumer Cyclical sector that generate free cash flow.
Terminal Growth Rate in Free Cash Flow
Return Relative to Current Share Price
For other companies in the Consumer Cyclical that have a similar discounted cashflow valuation profile (and ensuing price forecasts) as KMX, try AGS, CAKE, GPS, MOD, and BOMN.
The consumer sector is getting one of its engines of share price appreciation roaring back to life as buyback activity picks up, observes Oppenheimer's Brian Nagel.Nagel points to the recent announcements by CarMax (KMX), Lowe's (LOW) and Lululemon (LULU) on restarting share repurchase programs as a positive."We look upon these...
On 9/24/20 Carmax (KMX) reported earnings for the second quarter of FY 2021. Results were strong. Carmax reported gross profit margin of 14.0% and operating profit margin of 7.6%, the highest Q2 margins reported in a decade: (Source: Bloomberg with author highlights) The margin increases are small, but impressive nonetheless...
Robert Ruggirello, CFA on Seeking Alpha | September 25, 2020
Stocks were indicated to open up marginally higher on Tuesday, but the S&P 500 is again back up within 10 points of that all-time high that was seen in February, before the COVID-19 pandemic sent the economy into an instant recession. Amazingly, the S&P is up over 50% from the March panic-selling lows. Earnings season […]