KAR Auction Services vs CarMax Which Is More Promising?

KAR Auction Services and CarMax are two leading companies in the automotive industry, each offering distinct services and products to consumers. KAR Auction Services specializes in facilitating wholesale vehicle auctions, helping dealerships and automotive professionals buy and sell cars efficiently. On the other hand, CarMax is a well-known retailer of used cars, providing a streamlined and customer-friendly buying experience. Both companies have experienced fluctuations in their stock prices due to various market factors, making them key players to watch in the automotive sector.

KAR Auction Services or CarMax?

When comparing KAR Auction Services 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 KAR Auction Services 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. KAR Auction Services 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. KAR Auction Services reports a 5-year dividend growth of 0.00% year and a payout ratio of 61.75%. 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 KAR Auction Services P/E ratio at 30.25 and CarMax's P/E ratio at 28.66. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. KAR Auction Services P/B ratio is 1.64 while CarMax's P/B ratio is 1.94.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, KAR Auction Services has seen a 5-year revenue growth of -0.46%, while CarMax's is 0.99%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with KAR Auction Services's ROE at 4.02% and CarMax's ROE at 6.83%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $19.44 for KAR Auction Services and $75.63 for CarMax. Over the past year, KAR Auction Services's prices ranged from $12.86 to $20.15, with a yearly change of 56.69%. CarMax's prices fluctuated between $62.45 and $88.22, with a yearly change of 41.27%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.