KMX
CarMax cut its prices to bring back buyers. It resulted in a $121 million loss
Article Summary
SELL- CarMax Inc. (NYSE: CARM) reported a $121 million loss after lowering prices as part of a plan to attract new customers, with shares down more than 13% in mid-morning trading Tuesday.
- The used-car auto giant lost $120.7 million or 85 cents per share, compared to profits of $89.9 million a year ago, and has lost 37% of its value over the past year as consumers have viewed it as too expensive.
- Activist investor Starboard Value, which holds a $350 million stake in Carmax, urged management to adjust pricing and streamline its digital trade-in experience, with modest price reductions of approximately $100 to $300 per vehicle combined with a more responsive data-driven pricing system that adjusts in real time to local market conditions helping restore competitiveness.
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Growth Stock Scoring Breakdown
| METRIC | VALUE | WEIGHT | ANALYSIS |
|---|---|---|---|
| Sales Growth TTM ? | 0.1% | 25% | 20.0 ptsMinimal (0.1%) - Very weak |
| EPS Growth Next 5Y ? | -0.3% | 25% | 0.0 ptsNegative (-0.3%) - Declining expectations |
| Target Price Upside ? | 11.1% above | 20% | 0.0 ptsAbove Target (11.1% above) - Target: $37.00 vs Current: $41.64 |
| Gross Margin % ? | 11.3% | 15% | 20.0 ptsThin (11.3%) - Low-margin business |
| Drawdown from 52-Wk High ? | -42.2% | 15% | 80.0 ptsSolid Dip (-42.2%) - Good entry zone |
Disclaimer: This rating is for informational purposes only and is not financial advice.
All data sourced from Finviz.
Always conduct your own research and consult with a financial advisor before making investment decisions.
Past performance does not guarantee future results.
About KMX
- CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles and related products in the United States.
- The company operates in two segments: CarMax Sales Operations and CarMax Auto Finance.
- The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services.
- The CarMax Auto Finance segment provides financing alternatives for retail customers across a range of credit spectrum and arrangements with various financial institutions.
- The company was founded in 1993 and is based in Richmond, Virginia.