CarMax (KMX) is showing strength as it overcomes unfavorable pricing, while looking to maintain its market leadership. In recent quarters, used vehicle pricing has fallen, weighing on top-line growth. Meanwhile, management has been strategically investing in areas of growth, looking to maintain its edge. Its share price is trending higher on the stronger fundamental momentum. I am buying stock in this name.
Fundamental Narrative
KMX is attractively positioned as the company looks to overcome unfavorable pricing dynamics, while also managing its growth trajectory and its strong competitive position.
The company, through its subsidiaries, operates as a retailer of used vehicles in the United States. It operates in two segments, CarMax Sales Operations and CarMax Auto Finance. KMX offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles; vehicles that do not meet its retail standards to licensed dealers through on-site wholesale auctions; and extended protection plans to customers at the time of sale.
