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RISK CONCERN
Investment Strategy, Risk Analysis, and Insights by Chartered Professionals
Carmax, Inc. (XNYS:KMX) In-Depth Stock/Fundamental/Options Analysis Today
Primary Facts
KMX
Name:
CARMAX, INC. (XNYS:KMX)
Sector:
- 171028.00K
Industry:
Auto & Truck Dealerships
CEO:
Mr. William Nash
Total Employees:
32,647
Our Technological Advancement Rating
Our Rating:
D
Technological advancement compared to industry is -69.81% lower
ANALYSIS OF ALL CRITICAL FACTORS & RISKS RELATED TO THE STOCK & FUNDAMENTAL/LONG-TERM ANALYSIS OF CARMAX, INC.(KMX) AS PER DATA ANALYSIS OF LAST 3 YEARS AND COMPARISON WITH COMPETITORS/PEERS, AND AUTO & TRUCK DEALERSHIPS INDUSTRY. DATE: 07/09/2022
Primary Targets/Price Insights
Previous Close ($) :
87.56
One Month Price Target:
$88.25
Six Month Price Target :
$91.67
Likely Price in One Year's Time:
Ticker:
$95.78
Likely Trading Range Today Under (Normal Volatility)
$87.14
Price Upper limit ($) :
$88.02
Price Lower limit ($) :
Crash Risk Prep/Key Price Levels (High Volatility/Risk)
Price, as per data analysis, isn't likely to fall below:
Today:
$82.26
This week:
$75.7
This month :
$63.85
Other Primary facts
Market Cap:
13.94B
Market Cap Classification:
Mid Cap
Number of Shares
IPO Date:
159.17M
Best/Worst Daily Performance (Last 3+ Years)
Highest Daily Appreciation:
18.07%
-20.58%
Worst Daily Decline:
Our Options Trading Entry Points
Iron Condor entry points for options expiring in 1 week's time
Low risk (<2%) entry points
Buy Call:
Sell Call:
Buy Put:
Sell Put:
$112.17
$100.93
$62.95
$74.19
Medium risk (<10%) entry points
Buy Call
Sell Call
$97.27
Buy Put:
Sell Put:
$94.87
$77.81
$80.25
These entry points can be used for other strategies, such as butterflies, straddles, etc.
Risk-Adjusted returns (Sharpe Ratio) of
KMX
Sharpe Ratio:
0.59%
Comparison:
KMX, is amongst the top 60% stocks with highest risk-adjusted returns
Sharpe ratio is -78.76% lower than the industry
& is -74.13% lower than the market/S&P 500 average
Average Returns/Yield of
KMX
Daily returns:
0.03%
Weekly returns:
0.13%
Monthly returns:
0.53%
Yearly returns:
30.75%
Comparison of returns:
Average annual returns/yield (last 3 years) is -79.47% below industry average
Classification:
KMX, is amongst the top 60% highest yielding stocks in terms of daily returns
Results of T-Test of Returns:
0.72
Statistical test of Returns:
KMX has yielded returns statistically similar to the market
Volatility (measured by Standard Deviation)
Daily Volatility:
2.96%
Weekly Volatility:
6.62%
Monthly Volatility:
13.24%
Yearly Volatility:
45.87%
Volitlilty of last five days (Measured by Standard Deviation)
Average Volatility of this Week:
1.31%
Volatility in last five trading days has been -55.67% below long-term volatility
Value at Risk Analysis (VaR)
Daily VaR:
-6.06%
Weekly VaR:
-13.54%
Monthly VaR:
-27.08%
How Much Can the price of
KMX
Decline in a Recession?
Likely price decline in a recession:
Base case (decline):
-24%
Worst case (decline):
-93.81%
This translates to price declining to:
$66.85
This translates to price declining to:
$5.42
Severe Crash Probability
Risk of crash in next 6/12 months: Low (<25%)
What is Value at Risk (VaR)?
Risk Fundamentals
KMX is a 91.13% riskier investment compared to the market/S&P 500 & is 63.74% riskier than Nasdaq (IXIC)
Risk (measured by volatility) is -27.70% below industry average
Overall, it is amongst the top 50% most risky stocks
Beta Examination of
KMX
Beta in relation to market/S&P 500--1.40
Expected beta in 1 year's time:
1.061
Expected beta in 3 year's time:
1.5
Unlevered (debt free) Beta:
0.394
Beta in relation to Nasdaq (XNAS):
0.906
Beta in relation to all global stocks::
0.742
Beta Comparison & Analysis
Beta of competitors/peers::
1.341
Beta is 4.19% higher than peers
Average Industry Beta:
1.468
Beta is -4.78% below industry average
Sustainable Growth Rate Analysis
Sustainable growth rate for this stock/firm:
25.17%
Sustainable growth rate is 7.90% above industry average
Alpha provided | Alpha Analysis
Alpha provided:
-0.064
Alpha is -136.52% below industry average alpha yield
Alpha is -408% below the market average
Analysis of Cost of Capital of
KMX
Equity cost of capital:
0.127
Equity cost of capital is -3.64% below industry mean WACC
Unlevered (without debt) cost of capital:
3.59%
Before-tax cost of debt:
1.64%
After-tax cost of debt:
1.30%
Overall debt rating:
Highest AAA investment grade
Weighted average cost of capital (WACC):
1.30%
WACC is -38.07% below industry mean WACC
Key Per-Share Metrics & Analysis
Revenue per share:
$210.56
Revenue growth rate per share of (3Y):
2.96
Annual revenue growth rate is -69.86% below industry average
EPS:
$5.89
Expected Annual growth rate of EPS (3Y):
14.50%
Expected future EPS growth rate is -2.43% lower than the Auto & Truck Dealerships industry
Free cash flow (FCF) per share:
-
-
-
Debt per share
$98.06
EBITDA per share
$10.92
Valuation Analysis Today of
KMX
P/E Ratio:
14.86
P/E Ratio of Competitors/Peers:
14.67
P/E ratio is 1.32% higher than main peers & is -83.22% lower than the industry
Stock price/value with industry average P/E ratio: $521.59
KMX is -83.21% undervalued if valued using industry average P/E ratio
-
-
P/S (Price to Sales ratio):
0.42
Price to sales ratio is -45.76% below the industry mean
P/B (Price to book value ratio):
2.96
-
-
Net income growth rate (3Y):
25.89%
Net income growth rate is -80.97% lower than the industry average net income growth rate
Dividend Analysis
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Dividend History:
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
--$0.00
-
In-depth Debt & Leverage Analysis
Debt to equity ratio:
331.83%
Net debt to equity ratio:
335.23%
Debt to assets ratio:
68.36%
Net debt to assets ratio:
69.06%
Debt-to-asset ratio is 12.74% above industry average
Ability to repay debt:
Interest coverage ratio:
6.55
Interest coverage ratio is 62.97% more than industry average
Looking forward:
Debt growth rate:
0.77%
Annual debt growth is -100% lower than industry average debt growth rate
Debt repayment rate in last quarter: 17.92%
Analysis of Key Statistics
Correlation of price movement with the market:
0.636
Statistical significance of correlation:
KMX has a statistically significant correlation with the market
Average Correlation of the industry with the market:
0.499
Stock price is 27.54% more correlated with the market, compared to the industry average correlation
R Squared (percentage of price movement explained by movement of the market):
0.499
Correlation of price movement with Nasdaq (^IXIC):
-0.001
Covariance of price movement with the market:
-0.002
Kurtosis
7.466
Returns have a significant fat-tails (leptokurtic), i.e., returns considerably higher or lower than the mean returns are more probable, compared to assets with normally distributed returns
Skewness of returns:
-0.302
Returns are, approximately, symmetrical
Fundamental Analysis & Dupont Analysis of
KMX
Gross Profit Margin Ratio:
39%
Operating Profit Margin Ratio:
1.31%
Operating profit margin is -28.28% lower than the industry
Net Profit Margin Ratio:
39%
Effective Tax Rate:
23.37%
Effective tax rate is -14.78% lower than the industry
Dupont Method
Net Profit Margin
Return on Equity Ratio (ROE):
×
ROA
=
×
20.56%
Return on equity (ROE) is -4554.27% lower than the industry
Financial Leverage
Asset Turnover Ratio (ROA):
4.23%
Return on assets (ROA) is -102.63% lower than the industry
Financial Leverage:
3.2x
Current Ratio:
2.24
Current ratio is 26.54% above industry average
Cash Conversion Cycle (days):
10
Cash conversion cycle is -15.92% below industry average
The remaining useful life of property plant & equipment is: 12.0 years
Stock based compensation to net income ratio:
4.25%
In-depth Efficiency Analysis
Revenue generated per employee:
1.0M
Each employee generates 17% more revenue than industry average revenue per employee
EBITDA generated per employee:
53.2K
Each employee generates -18% less EBITDA than industry average revenue per employee
Profit generated per employee:
29.6K
Each employee generates -25% less net income/profit than industry average revenue per employee
Free cash flow (FCF) generated per employee:
- 5.2K
Each employee generates -1059% less free cash flow than industry average revenue per employee
Assets/Capital per employee
555.7K
Each employee generates -1059% less free cash flow than industry average revenue per employee
Research & Development (R&D) Analysis
-
-
Competitors/Peer firms of
KMX
GENUINE PARTS COMPANY (XNYS:GPC)
NVR, Inc. (XNYS:NVR)
INTERNATIONAL PAPER COMPANY (XNYS:IP)
WAYFAIR INC. (XNYS:W)
DARDEN RESTAURANTS, INC. (XNYS:DRI)
Amcor plc (XNYS:AMCR)
ROYAL CARIBBEAN CRUISES LTD. (XNYS:RCL)
DOMINO'S PIZZA, INC. (XNYS:DPZ)
Restaurant Brands International Inc. (XNYS:QSR)
Current Analyst Ratings
Strong buy�13%
Buy�17%
Hold�33%
Sell�4%
Strong sell�4%
Overall analyst sentiment is: Hold
Income Statement
Period:
TTM
Date:
5/31/22
Revenue:
33.51B
Cost of Revenue:
Gross Profit:
R&D Expense
General & Admin Expenses:
Selling, General & Admin Expenses
Sales and Marketing Expenses
Other Expenses :
Operating Expenses :
Cost & Expenses :
Interest Income:
Interest Expenses:
Depreciation & Amortization:
EBITDA:
Operating Income:
Other Income Expenses:
Income Before Tax:
Income Tax Expense:
Net Income:
Balance Sheet
Date:
Calendar Year:
Period:
Cash & Cash Equivalents:
Short Term Investments:
Cash & Short Term Investments:
Net Receivables:
Inventory:
Other Current Assets:
Total Current Assets:
PP&E:
Goodwill:
Intangible Assets:
Long Term Investments:
Tax Assets:
Other Non-Current Assets:
Total Non-Current Assets:
Other Assets:
Total Assets:
Accounts Payable:
Short Term Debt:
Tax Payables:
Deferred Revenue:
Other Current Liabilities:
Total Current Liabilities:
Long Term Debt:
Other Non-Current Liabilities:
Total Non Current Liabilities:
Other Liabilities:
Total Liabilities:
Common Stock:
Retained Earnings:
Accumulated Other Comprehensive Loss:
Other Total Stockholders' Equity:
Total Stockholders' Equity:
Total Liabilities and Stockholders' Equity:
Total Investments:
Total Debt:
Net Debt:
30.28B
3.24B
-
1.64B
2.47B
168.40M
334.57M
2.80B
986.50M
265.34M
210.90M
1.74B
438.13M
966.81M
1.26B
294.82M
966.81M
Statement of Cash Flow
Date:
Period:
62.36M
Differed Income Tax :
24.75M
Stock Based Compensation :
41.07M
Change in Working Capital :
- 665536.00K
Accounts Receivables:
- 174149.00K
Other Working Capital:
2.60B
Other Non-Cash Items:
- 11284.00K
Net Cash Provided by Operating Activities:
- 111883.00K
Investments in PP&E:
-
Net Acquisitions:
617.00K
Purchases of Investments:
- 4701.00K
Sales/Maturities of Investments:
Other Investing Activities:
Net Cash Used for Investing Activities:
Debt Repayment:
Common Stock Issued:
Common Stock Repurchased:
Dividend Paid:
Other Financing Activities:
Net Cash Used Provided by Financing Activities:
Effect of FOREX on Changes in Cash:
Net Changes in Cash:
Cash at End of Period:
Cash at Beginning of Period:
Operating Cash Flow:
Capital Expenditure:
Free Cash Flow (FCF):
5/31/21
2022
Q1
377.95M
-
377.95M
413.22M
3.25B
650.58M
4.69B
3.53B
-
-
-
138.49M
14.47B
18.14B
-
22.83B
1.06B
537.72M
96.62M
-
497.67M
2.09B
15.61B
428.53M
16.04B
-
18.13B
81.40M
3.21B
- 115754.0K
1.53B
May 31, 2021 at 6:00:00 AM
33.08B
4.70B
22.83B
-
16.15B
15.8B
86.00K
- 59145.00K
- 63143.00K
- 3408155.00K
21.59M
- 133838.00K
-
4.00B
475.11M
-
300.08M
1.07B
771.95M
- 111883.00K
- 59145.00K
- 171028.00K
Our Proprietary Portfolio Rating
Our Rating:
D
Price Forecast/Expected Price in Next 5 Years of
KMX
2023
2024
2025
2026
2027
$109.66
$119.96
$131.22
$143.54
$157.02