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5 Investors Betting Big on CarMax (KMX) Stock


  • CarMax (KMX) reported fourth-quarter revenue of $5.7 billion, missing the analyst estimate for $6.04 billion.
  • Vanguard is the largest shareholder of the company with ownership of 17.82 million shares.
  • KMX stock is up more than 17% year-to-date (YTD).
a Carmax (KMX) sign on a storefront
Source: Jonathan Weiss / Shutterstock.com

CarMax (NYSE:KMX) stock is accelerating higher after the used vehicle retailer reported its fourth-quarter earnings. During Q4, revenue tallied in at $5.7 billion, down 25.6% year-over-year (YOY) and falling short of the analyst estimate for $6.04 billion. On the bright side, though, adjusted EPS came in at 44 cents, beating the analyst estimate for 24 cents. That’s equivalent to a net income of $69 million, down from $159.8 million a year ago.

President and CEO Bill Nash said the following about the results:

“During fiscal year 2023, we made significant progress to further improve the most customer-centric omni-channel experience in the industry, including enabling online self-progression for all of our retail customers and completing the nationwide rollout of our finance prequalification product. We also enhanced our wholesale shopping experience by launching a modernized, mobile-friendly vehicle detail page.”

CarMax’s declining but better-than-expected profitability was attributed to cost-cutting measures enacted last December. These included a reduction in marketing spending, acquisition of cars, other expenses and a halt in corporate hiring. These measures were meant to address falling demand due to rising gas prices and interest rates.

In total, retail used vehicle sales were 169,884, down by 12.6% YOY, while CarMax purchased 262,000 vehicles from consumers and dealers, down by 22.5% YOY. The company also disclosed that it did not repurchase any shares during the quarter under its authorized $2.45 billion repurchase program.

5 Investors Betting Big on KMX Stock

Tracking institutional ownership is important, as these large investors provide liquidity and support for stocks. During Q4, a total of 640 13F filers disclosed a stake in KMX stock, up by 16 filers from the previous quarter. Of those filers, 20 own KMX in their top 10 positions. Meanwhile, the institutional put/call ratio sits at a high 1.42, up from 1.2 in the previous quarter. That’s equivalent to 6.92 millions puts and 4.89 million calls, implying a bearish options stance. With that in mind, let’s take a look at the top shareholders of CarMax:

  1. Vanguard: 17.82 million shares. Vanguard sold 17,560 shares during Q4.
  2. BlackRock (NYSE:BLK): 10.44 million shares. BlackRock acquired 326,104 shares during Q4.
  3. Principal Financial Group (NASDAQ:PFG): 10.43 million shares. Principal Financial sold 117, 746 shares during Q4.
  4. Principal Global Investors: 10.02 million shares. Principal Global acquired 1.39 million shares during Q4.
  5. Capital Research Global Investors: 7.99 million shares. Capital Research acquired 829 shares during Q4.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2023/04/5-investors-betting-big-on-carmax-kmx-stock/.

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