CarMax, Inc. (NYSE:KMX) Stock Upgrade by RBC Capital

• RBC Capital upgraded CarMax, Inc. (NYSE:KMX) to "Outperform" with a price target increase from $99 to $103.
• The stock has shown a 10% increase over the past year, with significant volatility in its price range.
• Despite stable gross margins, CarMax faces risks from potential credit losses and high valuation.

CarMax, Inc. (NYSE:KMX) is a leading retailer of used vehicles in the United States. The company operates through two segments: CarMax Sales Operations and CarMax Auto Finance. CarMax Sales Operations is responsible for the sale of used vehicles, while CarMax Auto Finance provides financing solutions to customers. The company competes with other used car retailers like AutoNation and Carvana.

On December 20, 2024, RBC Capital upgraded CarMax's stock to "Outperform," with a price target increase from $99 to $103. At the time, the stock was priced at $84.23. This upgrade suggests confidence in CarMax's future performance, despite the stock being considered overvalued, trading at 23 times earnings, as highlighted by RBC Capital.

CarMax shares have risen by 10% over the past year, with the current price reflecting a 3.45% increase, or $2.81, from the previous day. The stock has fluctuated between $82.99 and $91.25 today, with $91.25 being the highest price in the past year. The lowest price in the past year was $65.83, indicating significant volatility.

Despite stable gross margins and disciplined spending, CarMax faces risks from potential credit losses and high valuation. The company's financing division has tightened credit standards, but concerns remain about existing loan delinquencies and low reserve rates. These factors contribute to the "sell" rating, despite the recent upgrade by RBC Capital.

CarMax's market capitalization stands at approximately $13.05 billion, with a trading volume of 5,311,802 shares today. The company's financial health and market position are crucial for investors to consider, especially given the current valuation and potential risks associated with its financing operations.