CarMax (KMX)

[Fasted2020]

Still under value even after an awesome day.

Check Vector Vest. It has the stock valued at $88.88 and that was even before this report.

VALUE
Current Price: $80.19
Current Value: $88.88
KMX has a current Value of $88.88 per share, which is undervalued compared to its Price of $80.19 per share. Value is computed from forecasted earnings per share, forecasted earnings growth, profitability, interest, and inflation rates.

CarMax's biggest growth in units sold came from wholesale sales to other dealers -- up 9.6%. Gross profits from wholesale sales also grew 9.6%.

Thus, the surprising conclusion to this quarter's results appears to be that CarMax benefited most from an expanding role as car buyer of first resort. More and more often, people are bringing their old cars to CarMax to appraise and buy; then CarMax turns around and resells them wholesale to other dealers, taking its cut in the process. More than one in three cars CarMax sold last quarter were sold in this way.

Whether or not the EU and Trump get into an auto trade war it will only serve to help KMX in the near future as demand for used cars both wholesale and retail continue.

I wouldn't be surprised to see this trend develop in the future. Advising investors on what to expect over the course of the next year, CarMax let on that it plans to open 15 new car superstores through May 31, 2019, nine of them in cities with "populations of 600,000 or less, which we define as small markets." As the new big fish in these small ponds, I'd expect CarMax to attract an outsize share of car trade-ins there as well, further beefing up the company's powerful wholesale vehicle purchase-and-resale business.