AutoNation vs CarMax Which Is More Attractive?

AutoNation and CarMax are two major players in the automotive industry, but they have different business models that impact their stock performance. AutoNation is a traditional dealership company, operating over 300 locations across the United States, while CarMax is known for its no-haggle pricing and focus on used car sales. Both companies have seen growth in recent years, but analysts often compare their stock performance to see which is the better investment option. Investors should carefully consider the strengths and weaknesses of each company before making a decision.

AutoNation or CarMax?

When comparing AutoNation and CarMax, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between AutoNation and CarMax.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. AutoNation has a dividend yield of -%, while CarMax has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. AutoNation reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, CarMax reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with AutoNation P/E ratio at 9.54 and CarMax's P/E ratio at 32.20. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. AutoNation P/B ratio is 2.91 while CarMax's P/B ratio is 2.18.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, AutoNation has seen a 5-year revenue growth of 1.57%, while CarMax's is 0.99%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with AutoNation's ROE at 31.66% and CarMax's ROE at 6.83%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $171.12 for AutoNation and $85.53 for CarMax. Over the past year, AutoNation's prices ranged from $133.13 to $197.18, with a yearly change of 48.11%. CarMax's prices fluctuated between $65.83 and $88.22, with a yearly change of 34.01%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.