KMX
CarMax, Inc.
$40.33
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Moderate
·
Conviction
Fair Value
Trading 21.6% below fair value
You pay
$40.33
Bear
$41.17
Fair
$51.46
Bull
$61.76
Bear
$41.17
+2.1%
$3.82 × 12x P/E
Fair
$51.46
+27.6%
$3.82 × 15x P/E
Bull
$61.76
+53.1%
$3.82 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
10.6x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $37.78 from 35 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $51.46 per share.
Warnings
The company's reported profits differ from official accounting profits by 128%. Check what costs are being left out of the adjusted number.
Wall Street's average price target is $37.78 (from 35 analysts). Our estimate is 52% above the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples