CarMax vs CarGurus Which Outperforms?

CarMax and CarGurus are two companies that operate in the automotive industry but have very different business models. CarMax is a retailer of used cars with physical locations across the United States, while CarGurus is an online automotive marketplace that connects buyers and sellers. Both companies have seen success in recent years, with CarMax benefiting from the strong demand for used cars and CarGurus experiencing growth in its digital platform. Investors can compare the stocks of these companies to determine which may be a better investment opportunity.

CarMax or CarGurus?

When comparing CarMax and CarGurus, 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 CarGurus.

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 CarGurus 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, CarGurus reports a 5-year dividend growth of 0.00% year and a payout ratio of -0.13%.

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 CarGurus's P/E ratio at -90.91. 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 CarGurus's P/B ratio is 8.05.

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 CarGurus's is 0.94%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CarMax's ROE at 6.83% and CarGurus's ROE at -8.08%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $85.53 for CarMax and $37.41 for CarGurus. Over the past year, CarMax's prices ranged from $65.83 to $88.22, with a yearly change of 34.01%. CarGurus's prices fluctuated between $21.18 and $39.10, with a yearly change of 84.61%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.