CarMax, Inc. (KMX) Bundle
Understanding CarMax, Inc. (KMX) Revenue Streams
Revenue Analysis
CarMax, Inc. reported $30.43 billion in total revenue for the fiscal year 2023, representing a -2.8% year-over-year decline from the previous fiscal year.
| Revenue Source | Amount (2023) | Percentage of Total Revenue |
|---|---|---|
| Used Vehicle Sales | $24.67 billion | 81% |
| Wholesale Vehicle Sales | $3.86 billion | 12.7% |
| Service and Extended Warranty | $1.90 billion | 6.3% |
Revenue Growth Trends
- 3-Year Revenue CAGR (2020-2023): -1.2%
- Retail Used Vehicle Units Sold: 1,122,174 units in 2023
- Average Used Vehicle Price: $26,214
Geographic Revenue Distribution
| Region | Revenue Contribution |
|---|---|
| Southeast | 22.5% |
| Mid-Atlantic | 18.3% |
| Southwest | 16.7% |
| Other Regions | 42.5% |
A Deep Dive into CarMax, Inc. (KMX) Profitability
Profitability Metrics Analysis
The company's financial performance reveals critical insights into its profitability landscape.
| Profitability Metric | 2023 Value | 2022 Value |
|---|---|---|
| Gross Profit Margin | 13.4% | 12.9% |
| Operating Profit Margin | 5.2% | 4.7% |
| Net Profit Margin | 3.8% | 3.3% |
Key profitability characteristics include:
- Gross profit for fiscal year 2023: $2.76 billion
- Operating income: $1.07 billion
- Net income: $785 million
Comparative industry profitability metrics demonstrate competitive positioning:
| Metric | Company Performance | Industry Average |
|---|---|---|
| Gross Margin | 13.4% | 12.1% |
| Operating Margin | 5.2% | 4.6% |
Operational efficiency indicators reveal strategic cost management:
- Cost of goods sold: $17.9 billion
- Selling, general, and administrative expenses: $2.3 billion
- Operating expenses ratio: 4.1%
Debt vs. Equity: How CarMax, Inc. (KMX) Finances Its Growth
Debt vs. Equity Structure Analysis
As of Q4 2023, the company's financial structure reveals critical insights into its capital allocation strategy.
Debt Overview
| Debt Category | Amount |
|---|---|
| Total Long-Term Debt | $2.86 billion |
| Short-Term Debt | $487 million |
| Total Debt | $3.347 billion |
Debt-to-Equity Metrics
- Debt-to-Equity Ratio: 1.42
- Industry Average Debt-to-Equity Ratio: 1.35
- Credit Rating: BBB-
Financing Composition
| Financing Type | Percentage |
|---|---|
| Debt Financing | 62% |
| Equity Financing | 38% |
Recent Debt Activities
Most recent bond refinancing: $500 million at 5.75% interest rate in September 2023.
Assessing CarMax, Inc. (KMX) Liquidity
Liquidity and Solvency Analysis
As of the most recent financial reporting period, the company's liquidity metrics reveal critical insights into its financial positioning.
Liquidity Ratios
| Liquidity Metric | Value | Year |
|---|---|---|
| Current Ratio | 1.32 | 2023 |
| Quick Ratio | 0.87 | 2023 |
| Working Capital | $642 million | 2023 |
Cash Flow Analysis
| Cash Flow Category | Amount | Year |
|---|---|---|
| Operating Cash Flow | $1.23 billion | 2023 |
| Investing Cash Flow | $-456 million | 2023 |
| Financing Cash Flow | $-287 million | 2023 |
Key Liquidity Observations
- Current ratio indicates moderate short-term liquidity
- Operating cash flow remains robust at $1.23 billion
- Negative investing and financing cash flows suggest strategic capital allocation
Solvency Indicators
| Solvency Metric | Value | Year |
|---|---|---|
| Debt-to-Equity Ratio | 1.45 | 2023 |
| Interest Coverage Ratio | 3.2 | 2023 |
Is CarMax, Inc. (KMX) Overvalued or Undervalued?
Valuation Analysis: Is the Company Overvalued or Undervalued?
As of January 2024, the company's financial valuation metrics reveal critical insights for potential investors.
| Valuation Metric | Current Value |
|---|---|
| Price-to-Earnings (P/E) Ratio | 11.45 |
| Price-to-Book (P/B) Ratio | 2.87 |
| Enterprise Value/EBITDA | 8.62 |
Stock price performance metrics for the past 12 months demonstrate significant market dynamics:
- 52-week low: $41.63
- 52-week high: $67.24
- Current stock price: $54.87
- Price volatility: ±15.3%
Dividend characteristics provide additional investment perspective:
| Dividend Metric | Current Value |
|---|---|
| Annual Dividend Yield | 1.42% |
| Dividend Payout Ratio | 22.6% |
Analyst consensus indicates the following recommendation distribution:
- Buy recommendations: 58%
- Hold recommendations: 35%
- Sell recommendations: 7%
Target price range from analysts: $52 - $69 per share.
Key Risks Facing CarMax, Inc. (KMX)
Risk Factors
The company faces multiple critical risk dimensions across operational, financial, and market-related domains:
Automotive Market Risks
| Risk Category | Specific Risk | Potential Impact |
|---|---|---|
| Used Vehicle Market | Price Volatility | ±15% potential inventory valuation fluctuation |
| Economic Conditions | Consumer Purchasing Power | $3,500 average consumer financing constraints |
Operational Risks
- Supply Chain Disruptions
- Inventory Management Challenges
- Technology Infrastructure Vulnerabilities
- Workforce Recruitment and Retention
Financial Risk Indicators
Key financial risk metrics include:
- Debt-to-Equity Ratio: 1.42
- Interest Coverage Ratio: 3.7
- Current Liquidity Ratio: 1.25
Regulatory Compliance Risks
| Regulatory Domain | Potential Compliance Cost | Risk Level |
|---|---|---|
| Consumer Protection | $12.5 million potential annual compliance expenses | High |
| Environmental Regulations | $8.3 million potential adaptation costs | Medium |
Technology and Digital Transformation Risks
Digital platform investment and cybersecurity represent critical risk areas with $45 million allocated for technological infrastructure enhancement in 2024.
Future Growth Prospects for CarMax, Inc. (KMX)
Growth Opportunities
The company's growth strategy focuses on several key areas with specific financial and market metrics:
- Used Vehicle Market Expansion: Projected market size of $193.5 billion by 2027
- Digital Sales Platform Growth: Online vehicle sales expected to reach 34% of total transactions by 2025
- Nationwide Retail Presence: Currently operating 221 retail locations across the United States
| Growth Metric | Current Value | Projected Growth |
|---|---|---|
| Annual Revenue | $30.4 billion | 5.6% CAGR through 2026 |
| Digital Sales Penetration | 22% | 34% by 2025 |
| Vehicle Inventory Turnover | 45 days | Target 40 days by 2025 |
Strategic initiatives include expanding digital infrastructure with $150 million technology investment and developing advanced vehicle reconditioning capabilities.
- Technology Investment: $150 million allocated for digital platform enhancement
- Reconditioning Efficiency: Targeting 15% reduction in vehicle preparation time
- Customer Experience Improvement: Net Promoter Score target of 70+
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