Carvana vs CarMax Which Is Stronger?

Carvana and CarMax are both major players in the used car industry, but they have some key differences that make their stocks appealing to different types of investors. Carvana is considered a disruptor in the traditional car-buying market with its online platform and focus on a seamless customer experience. On the other hand, CarMax is a well-established brick-and-mortar retailer that offers a wide selection of pre-owned vehicles. Both companies have seen impressive growth in recent years, making them attractive options for investors looking for exposure to the used car market.

Carvana or CarMax?

When comparing Carvana 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 Carvana 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. Carvana 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. Carvana reports a 5-year dividend growth of 0.00% year and a payout ratio of 0.00%. 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 Carvana P/E ratio at 1828.73 and CarMax's P/E ratio at 32.48. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Carvana P/B ratio is 50.88 while CarMax's P/B ratio is 2.19.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Carvana has seen a 5-year revenue growth of 0.51%, while CarMax's is 0.99%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Carvana's ROE at 4.07% and CarMax's ROE at 6.83%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $237.80 for Carvana and $86.57 for CarMax. Over the past year, Carvana's prices ranged from $38.41 to $268.34, with a yearly change of 598.62%. 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.