CarMax vs KAR Auction Services

CarMax and KAR Auction Services are two prominent companies in the automotive industry, but they have markedly different business models. CarMax is a retailer that sells used vehicles, while KAR Auction Services operates a platform for wholesale vehicle auctions. Investors looking to capitalize on the resale market may be attracted to CarMax's strong retail presence and customer base. On the other hand, KAR Auction Services' platform offers opportunities for investors interested in the wholesale side of the industry. Both companies have their strengths and weaknesses, making them intriguing options for those seeking exposure to the automotive sector.

CarMax or KAR Auction Services?

When comparing CarMax and KAR Auction Services, 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 KAR Auction Services.

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 KAR Auction Services 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, KAR Auction Services reports a 5-year dividend growth of 0.00% year and a payout ratio of 79.00%.

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 27.50 and KAR Auction Services's P/E ratio at 30.63. 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 1.86 while KAR Auction Services's P/B ratio is 0.89.

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 KAR Auction Services's is -0.46%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with CarMax's ROE at 6.83% and KAR Auction Services's ROE at 2.90%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $73.19 for CarMax and $15.78 for KAR Auction Services. Over the past year, CarMax's prices ranged from $59.66 to $88.22, with a yearly change of 47.87%. KAR Auction Services's prices fluctuated between $12.86 and $18.73, with a yearly change of 45.65%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.