KMX is now undervalued and could go up 117%

Based on our analysis, CarMax (NYSE: KMX) has received an undervalued rating of 4 out of 5 stars from Cashu. This rating is supported by a comparison of key financial ratios against its industry sector, indicating strong performance and potential for growth. The Price-to-Earnings (PE) Ratio for CarMax stands at 26.18, significantly higher than the sector average of 16.67. While a higher PE ratio can suggest that the stock is overvalued, it may also indicate strong future earnings expectations, making CarMax an attractive option for growth-oriented investors. In terms of profitability, CarMax boasts a Net Profit Margin of 1.81, greatly exceeding the sector average of 0.13. This ratio indicates that CarMax retains more profit from its sales compared to its peers, showcasing effective cost management and operational efficiency. Another notable metric is the Return on Equity (ROE) Ratio, which is 7.89, compared to the sector’s 1.68. A higher ROE signifies that CarMax is effectively using shareholders' equity to generate profits, suggesting a well-managed company with a strong profit-generating ability. The Return on Assets (ROA) for CarMax is 1.76, while the sector average is negative at -0.09. This ratio demonstrates that CarMax is better at converting its assets into earnings, a positive sign for asset utilization. While CarMax does not currently offer a dividend, its strong financial position and operational metrics highlight its potential for future returns. This is not a comprehensive overview of our valuation, and should not be viewed as financial advice. Always do your own research before considering an investment.