CarMax Inc. (KMX): Today's Featured Specialty Retail Winner

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

CarMax ( KMX) pushed the Specialty Retail industry higher today making it today's featured specialty retail winner. The industry as a whole closed the day up 1.2%. By the end of trading, CarMax rose 61 cents (1.7%) to $35.88 on light volume. Throughout the day, 1.6 million shares of CarMax exchanged hands as compared to its average daily volume of 2.3 million shares. The stock ranged in a price between $34.84-$35.90 after having opened the day at $35.10 as compared to the previous trading day's close of $35.27. Other companies within the Specialty Retail industry that increased today were: Five Below ( FIVE), up 8.7%, Perfumania Holdings ( PERF), up 8.7%, Trans World Entertainment ( TWMC), up 6.9%, and 1-800 Flowers.com ( FLWS), up 6.1%.
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CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles in the United States. It also sells vehicles that do not meet its retail standards to licensed dealers through on-site wholesale auctions, as well as sells new vehicles under franchise agreements. CarMax has a market cap of $7.98 billion and is part of the services sector. The company has a P/E ratio of 19.8, above the S&P 500 P/E ratio of 17.7. Shares are up 15.7% year to date as of the close of trading on Tuesday. Currently there are nine analysts that rate CarMax a buy, no analysts rate it a sell, and three rate it a hold.

TheStreet Ratings rates CarMax as a hold. The company's strengths can be seen in multiple areas, such as its revenue growth, reasonable valuation levels and increase in stock price during the past year. However, as a counter to these strengths, we also find weaknesses including deteriorating net income, disappointing return on equity and weak operating cash flow.

For investors not wanting singular stock exposure, ETFs may be of interest. Investors who are bullish on the specialty retail industry could consider SPDR S&P Retail ETF ( XRT) while those bearish on the specialty retail industry could consider ProShares Ultra Sht Consumer Goods ( SZK).

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