KMX (Carmax Inc) vs S&P 500 Comparison

KMX

S&P 500

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KMX

S&P 500

Difference

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KMX

S&P 500

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Compare the stock's returns with its benchmark index and competitors. Gain insights into its relative performance over time.

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S&P 500

KMX

ORLY

AZO

CVNA

2207

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Compare the stock's returns with its benchmark index and competitors. Gain insights into its relative performance over time.

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Carmax Inc
Glance View

Economic Moat

None

Market Cap

12.6B USD

Industry

Retail

CarMax Inc. found its genesis in the concept of revolutionizing the used car market, which had long been plagued by a reputation for questionable practices and lack of transparency. Established in 1993 by Circuit City executives, CarMax quickly emerged as a disruptive force by instilling trust and simplicity into the automotive retail environment. The company shed light on vehicle histories and pricing structures that were previously cloaked in opacity, thus offering buyers a reliable alternative in a fragmented market. By implementing a chain of superstores, CarMax provided an extensive inventory where customers could browse, test, and purchase vehicles in one streamlined experience. This customer-centric model set CarMax apart from traditional dealerships, driving rapid expansion and solidifying its foothold as a dominant player in the used-car landscape. Operationally, CarMax generates its revenue through a combination of direct car sales and associated financing services. The primary income stream flows from buying cars at auction or from individual sellers, then refurbishing them for resale at attractive prices. CarMax’s no-haggle, fixed-price strategy not only simplifies the buying process but also cultivates trust with customers, enticing high-volume sales. Furthermore, CarMax capitalizes on its captive finance arm, CarMax Auto Finance, which offers a range of financing solutions that generate interest income and diversify revenue streams. Additionally, by selling vehicles that do not meet their retail standards at wholesale auctions, CarMax efficiently manages inventory and mitigates potential losses. The synergy between its innovative retail approach and complementary financial services continues to fuel the company's growth and profitability in the ever-evolving automotive market.

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KMX Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

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KMX

vs

S&P 500

Stocks Performance
KMX vs S&P 500

Performance Gap
KMX vs S&P 500

Performance By Year
KMX vs S&P 500

Competitors Performance
Carmax Inc vs Peers

Carmax Inc
Glance View

Company

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KMX vs S&P 500

Stocks Performance KMX vs S&P 500

Performance Gap KMX vs S&P 500

Performance By Year KMX vs S&P 500

Competitors Performance Carmax Inc vs Peers

Carmax Inc Glance View

Company

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Tools

Stocks

KMX

vs

S&P 500

Stocks Performance
KMX vs S&P 500

Performance Gap
KMX vs S&P 500

Performance By Year
KMX vs S&P 500

Competitors Performance
Carmax Inc vs Peers

Carmax Inc
Glance View