CarGurus vs CarMax Which Offers More Value?

CarGurus and CarMax are both well-known companies in the automotive industry, but they have different business models that attract different types of investors. CarGurus is an online marketplace for buying and selling new and used cars, while CarMax is a traditional brick-and-mortar retailer with a focus on selling high-quality pre-owned vehicles. Investors interested in tech-based companies may be drawn to CarGurus, while those seeking stability and strong sales may prefer CarMax. Both stocks have seen fluctuations in recent years, making them interesting options for investors looking to diversify their portfolios.

CarGurus or CarMax?

When comparing CarGurus 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 CarGurus 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. CarGurus 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. CarGurus reports a 5-year dividend growth of 0.00% year and a payout ratio of -0.13%. 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 CarGurus P/E ratio at -90.91 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. CarGurus P/B ratio is 8.05 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, CarGurus has seen a 5-year revenue growth of 0.94%, while CarMax's is 0.99%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CarGurus's ROE at -8.08% and CarMax's ROE at 6.83%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $37.41 for CarGurus and $85.53 for CarMax. Over the past year, CarGurus's prices ranged from $21.18 to $39.10, with a yearly change of 84.61%. 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.