CarMax vs Cars.com Which Is Superior?

CarMax and Cars.com are two major players in the automotive industry, but their stocks have seen varying levels of performance in recent years. CarMax is a well-established retailer of used cars with a strong track record of growth and profitability. On the other hand, Cars.com is an online platform that connects car buyers with sellers, but has faced challenges due to increased competition in the digital marketplace. Investors interested in automotive stocks must weigh the strengths and weaknesses of each company before making a decision.

CarMax or Cars.com?

When comparing CarMax and Cars.com, 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 Cars.com.

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 Cars.com 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, Cars.com 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 Cars.com's P/E ratio at 30.90. 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 Cars.com's P/B ratio is 2.41.

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 Cars.com's is 0.10%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CarMax's ROE at 6.83% and Cars.com's ROE at 7.95%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $85.53 for CarMax and $18.22 for Cars.com. Over the past year, CarMax's prices ranged from $65.83 to $88.22, with a yearly change of 34.01%. Cars.com's prices fluctuated between $15.05 and $21.24, with a yearly change of 41.13%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.