CarMax (KMX) Could Be Smart Value Play as Used Auto Inventories Normalize - Barron's
Tweet
Share
E-mail
Get Alerts KMX Hot Sheet
Price: $59.92 -0.22%
Rating Summary:
12 Buy, 23 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
12 Buy, 23 Hold, 2 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Join SI Premium – FREE
CarMax (NYSE: KMX) is suffering through a used-car drought, which may make it time to "shift" some into your portfolio.
According to Barron's, the 2009 credit crisis is making it tough for CarMax to find late-model autos. The dynamics have forced the used auto giant to pay more for inventory and charge more to move them off the lot.
Notably, Oppenheimer sees the supply pf autos one-to-four-years-old to bottom-out this year, at 49 million from 68 million back in 2008. Overall, sales of new cars in the U.S. is expected to hit 14.5 million this year, a 40 percent gain from 2009.
Analysts currently see CarMax reporting record revs of $10.6 billion in fiscal 2013, with that growing 9 percent in FY14.
CarMax is also at a juicy part of a replacement cycle. Polk Research estimates that the average age of cars in the U.S. is 11.1 years, the oldest since the firm began tracking the metric in 1995. CarMax also is a much more attractive option when compared to new car sales, with new cars averaging pre-incentive prices of $30,300, versus $19,500 at CarMax.
Shares of CarMax are going for about 16 times fiscal 2014 earnings expectations, versus its 10-year average multiple of 20 times. Should CarMax be able to get a richer valuation to 19 times estimates, the stock could trade for about 38 per share.
CarMax is trading 0.3 percent lower Monday.
According to Barron's, the 2009 credit crisis is making it tough for CarMax to find late-model autos. The dynamics have forced the used auto giant to pay more for inventory and charge more to move them off the lot.
Notably, Oppenheimer sees the supply pf autos one-to-four-years-old to bottom-out this year, at 49 million from 68 million back in 2008. Overall, sales of new cars in the U.S. is expected to hit 14.5 million this year, a 40 percent gain from 2009.
Analysts currently see CarMax reporting record revs of $10.6 billion in fiscal 2013, with that growing 9 percent in FY14.
CarMax is also at a juicy part of a replacement cycle. Polk Research estimates that the average age of cars in the U.S. is 11.1 years, the oldest since the firm began tracking the metric in 1995. CarMax also is a much more attractive option when compared to new car sales, with new cars averaging pre-incentive prices of $30,300, versus $19,500 at CarMax.
Shares of CarMax are going for about 16 times fiscal 2014 earnings expectations, versus its 10-year average multiple of 20 times. Should CarMax be able to get a richer valuation to 19 times estimates, the stock could trade for about 38 per share.
CarMax is trading 0.3 percent lower Monday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- JPMorgan Upgrades Amber Enterprises India Ltd (AMBER:IN) to Overweight
- Hydrofarm Holdings Group, Inc. (HYFM) Misses Q2 EPS by 134c
- Optimum Communications gets NYSE non-compliance notice over stock price
Create E-mail Alert Related Categories
Analyst Comments, Insiders' BlogRelated Entities
Barron's, EarningsSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
