KMX
CarMax, Inc.
$58.39
Stable Earnings Power
65%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 4.9% above fair value
You pay
$58.39
Bear
$44.53
Fair
$55.66
Bull
$66.80
Bear
$44.53
-23.7%
$3.82 × 12x P/E
Fair
$55.66
-4.7%
$3.82 × 15x P/E
Bull
$66.80
+14.4%
$3.82 × 18x P/E
Key Value Driver
Normalized P/E multiple (15x base case)
Implied Market Multiple
15.3x
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 $51.78 from 36 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $55.66 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.
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