CarMax vs AutoNation Which Is Stronger?

CarMax and AutoNation are two leading companies in the automotive industry, each offering unique investment opportunities in the stock market. CarMax specializes in the sale of used cars through its vast network of retail locations, while AutoNation operates as a retailer of new and used vehicles with a focus on customer service. Both companies have shown strong financial performance in recent years, making them attractive options for investors looking to capitalize on the strength of the automotive market.

CarMax or AutoNation?

When comparing CarMax and AutoNation, 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 CarMax and AutoNation.

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. CarMax has a dividend yield of -%, while AutoNation has a dividend yield of -%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. CarMax reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. On the other hand, AutoNation 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 CarMax P/E ratio at 32.20 and AutoNation's P/E ratio at 9.54. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. CarMax P/B ratio is 2.18 while AutoNation's P/B ratio is 2.91.

Growth Investors:

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

Retail Investors:

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