Why This 1 Value Stock Could Be a Great Addition to Your Portfolio
Taking full advantage of the stock market and investing with confidence are common goals for new and old investors alike.
Many investors also have a go-to methodology that helps guide their buy and sell decisions. One way to find winning stocks based on your preferred way of investing is to use the Zacks Style Scores, which are indicators that rate stocks based on three widely-followed investing types: value, growth, and momentum.
Why Investors Should Pay Attention to This Value Stock
Finding good stocks at good prices, and discovering which companies are trading under their true value, are what value investors like to focus on. So, the Value Style Score takes into account ratios like P/E, PEG, Price/Sales, and Price/Cash Flow to highlight the most attractive and discounted stocks.
CarMax (KMX)
Headquartered in Richmond, VA, CarMax is the largest retailer of used vehicles in the United States. In fiscal 2023 (ended Feb 28, 2023), CarMax retailed 807,823 used vehicles. The company is also one of the nation’s largest operators of wholesale vehicle auctions, with 585,071 vehicles sold in fiscal 2023. Additionally, CarMax is engaged in providing customers with a full range of related services including financing of vehicle purchases and sale of extended warranties, accessories and vehicle repair services. As of Feb 28, 2023, CarMax operated 240 used vehicle stores in the United States. A major chunk of CarMax total revenues is generated in the Southeastern U.S., California, Texas and Washington, D.C./Baltimore.
KMX sits at a Zacks Rank #3 (Hold), holds a Value Style Score of A, and has a VGM Score of A. Compared to the Automotive - Retail and Wholesale - Parts industry's P/E of 19.9X, shares of CarMax are trading at a forward P/E of 19.9X. KMX also has a PEG Ratio of 1.1, a Price/Cash Flow ratio of 15.4X, and a Price/Sales ratio of 0.4X.
A company's earnings performance is important for value investors as well. For fiscal 2025, two analysts revised their earnings estimate higher in the last 60 days for KMX, while the Zacks Consensus Estimate has increased $0.02 to $3.61 per share. KMX also holds an average earnings surprise of 12.9%.
With strong valuation and earnings metrics, a good Zacks Rank, and top-tier Value and VGM Style Scores, investors should strongly think about adding KMX to their portfolios.
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CarMax, Inc. (KMX) : Free Stock Analysis Report
