Carmax Intrinsic Value Calculation – CARMAX Reports Decreases in FY2024 Q2 Revenue & Net Income
September 29, 2023
🌥️Earnings Overview
On September 28 2023, CARMAX ($NYSE:KMX) reported their Q2 earnings results for FY2024, showing a total revenue of USD 7073.8 million, representing a 13.1% decrease from the same quarter of the previous year, and a net income of USD 118.6 million, down 5.8% from the same period in the prior year.
Market Price
On Thursday, CARMAX reported a decrease in their second quarter revenue and net income for the fiscal year 2024. The company’s stock opened at $70.4 and closed at $69.0, plunging by 13.4% from the previous closing price of 79.7. While CARMAX reported an increase in used vehicle sales, this wasn’t enough to offset the losses in new vehicle sales and other operations. CEO Bill Nash stated that the company is “committed to serving our customers with safety as our top priority” and that CARMAX will continue to monitor the situation closely and adjust their strategies accordingly. Live Quote…
About the Company
Income Snapshot
Below shows the total revenue, net income and net margin for Carmax. More…
| Total Revenues | Net Income | Net Margin |
| 26.99k | 453.52 | 1.7% |
Cash Flow Snapshot
Below shows the cash from operations, investing and financing for Carmax. More…
| Operations | Investing | Financing |
| 742.62 | -430.2 | 159.01 |
Balance Sheet Snapshot
Below shows the total assets, liabilities and book value per share for Carmax. More…
| Total Assets | Total Liabilities | Book Value Per Share |
| 27.3k | 21.29k | 37.96 |
Key Ratios Snapshot
Some of the financial key ratios for Carmax are shown below. More…
| 3Y Rev Growth | 3Y Operating Profit Growth | Operating Margin |
| 13.7% | -9.7% | 4.5% |
| FCF Margin | ROE | ROA |
| 1.2% | 12.8% | 2.8% |
Analysis – Carmax Intrinsic Value Calculation
At GoodWhale, we have conducted an analysis of CARMAX‘s fundamental performance and our proprietary Valuation Line has produced a fair value for the stock at around $115.6. This value is substantially higher than the current value of $69.0 per share, indicating that CARMAX is significantly undervalued in the market by 40.3%. This presents a great opportunity to capitalize on the potential upside of this fundamentally strong company. More…
Peers
CarMax Inc is one of the largest used car dealers in the United States. Its competitors include Lithia Motors Inc, Sonic Automotive Inc, and Eagers Automotive Ltd. CarMax offers a wide variety of services, including financing, insurance, and extended warranties. It has a nationwide network of stores and a strong online presence.
– Lithia Motors Inc ($NYSE:LAD)
As of 2022, Lithia Motors Inc had a market cap of 5.04B and a Return on Equity of 25.15%. Lithia Motors Inc is a publicly traded automotive retailer that sells new and used vehicles, and provides financing, vehicle service contracts, and other aftermarket products. The company operates through three segments: Retail Operations, Vehicle Financing, and Other. Lithia Motors Inc has over 200 dealerships across the United States.
– Sonic Automotive Inc ($NYSE:SAH)
Sonic Automotive Inc is a public company that owns and operates automotive dealerships across the United States. As of 2022, the company had a market cap of 1.61B and a return on equity of 31.11%. Sonic Automotive Inc is a Fortune 500 company and is headquartered in Charlotte, North Carolina. The company operates in over 100 locations and employs over 10,000 people. Sonic Automotive Inc is a publicly traded company on the New York Stock Exchange under the ticker symbol SAH.
– Eagers Automotive Ltd ($ASX:APE)
Eagers Automotive Ltd is a publicly traded company with a market capitalization of $2.81 billion as of 2022. The company has a return on equity of 26.52%. Eagers Automotive is a leading provider of automotive products and services in Australia. The company operates a network of over 60 dealerships across Australia, New Zealand, and the United Kingdom. Eagers Automotive offers a wide range of vehicles, including passenger cars, SUVs, and light commercial vehicles. The company also provides finance, insurance, and aftermarket products and services.
Summary
CARMAX‘s reported financial results for the second quarter of FY2024 on September 28, 2023 showed total revenue of USD 7073.8 million, a 13.1% decrease from the same period last year, and a net income of USD 118.6 million, a 5.8% decrease. Following the announcement, the stock price decreased on the same day. Investors should take into consideration this decline in revenue and income in their analysis of CARMAX.
Additionally, the company’s debt and liquidity position should be monitored as both have increased significantly in the past year. Going forward, careful evaluation of trends in sales and operating expenses will be important to understand the underlying fundamentals of the company and its potential for growth.
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