CarMax (KMX): Assessing Valuation After Recent Double-Digit Share Price Slide

CarMax (KMX) shares have had a turbulent ride lately, with the stock down nearly 42% over the past 3 months. Investors are watching closely as broader market shifts and demand trends continue to challenge used car retailers.

See our latest analysis for CarMax.

CarMax’s recent 7-day share price return of -16.22% highlights how much momentum has faded, with the 1-year total shareholder return of -55.48% confirming broader challenges for the stock. While short-term volatility is top of mind, performance over the last several years has also trailed, raising questions around recovery and long-term value.

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With shares trading well below analyst targets and signs of a meaningful discount, it is worth asking whether CarMax’s challenges are already reflected in its price or if a true buying opportunity is emerging for patient investors.

Most Popular Narrative: 37.5% Undervalued

Compared to CarMax’s last close price of $34.14, the most widely followed narrative estimates a fair value of $54.64, implying significant upside potential. The narrative frames this opportunity using a discount rate of 12.5%, with valuation driven by factors seen as key to future recovery.

CarMax's growth in digital sales channels, including an increase in omnichannel sales, positions the company to expand its market share and boost revenue in the future. The ongoing enhancements to their digital tools are expected to further integrate online and in-store sales.

Read the complete narrative.

What’s the secret behind this steep discount? Dive into projections that count on an earnings turnaround and a profit margin leap. See how bold digital bets and aggressive financial forecasts could reshape CarMax’s future. Curious what it all means for value hunters?

Result: Fair Value of $54.64 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing declines in wholesale gross profit and intensifying competition in vehicle sourcing could limit the recovery potential and put pressure on CarMax’s margins in the future.

Find out about the key risks to this CarMax narrative.

Build Your Own CarMax Narrative

If you see the story differently or want a fresh perspective, you can analyze the numbers and build a personalized CarMax outlook in just a few minutes, then Do it your way.

A great starting point for your CarMax research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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