No. of Recommendations: 8
Valueline estimates that KMX's EPS in the years 2026-2028 will be $4.40.
Also, the median P/E of KMX in the last 10 years has been 18. If we assume that multiple to apply in 2026-2028 (which, in my view is a very optimistic assumption, given the growth rate of EPS from now to then), the expected price then will be $79.20, as against a current price of $74.66.
KMX pays no dividends so if the assumption above bears out, we're looking at a 6 percent total return from now to 2026-2028.
Is anyone else concerned about this issue?
KMX P/S ratio is now as low as in 2020 and almost as low as during the abyss of 2008. In 2021 P/S ratio was around ~1.1x and it was clearly overvalued compared to it's history, now it sells for ~0.4x. If it's undervalued depends on wether you think they can get back to their historical margins. I'm betting they can.
