CarMax (NYSE: KMX) and Rush Enterprises (NASDAQ:RUSHA) are both retail/wholesale companies, but which is the superior stock? We will contrast the two businesses based on the strength of their profitabiliy, institutional ownership, earnings, risk, valuation, analyst recommendations and dividends.

Volatility & Risk

CarMax has a beta of 1.34, meaning that its stock price is 34% more volatile than the S&P 500. Comparatively, Rush Enterprises has a beta of 1.16, meaning that its stock price is 16% more volatile than the S&P 500.

Profitability

This table compares CarMax and Rush Enterprises’ net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
CarMax 4.07% 21.72% 4.19%
Rush Enterprises 1.26% 6.17% 1.97%

Valuation & Earnings

This table compares CarMax and Rush Enterprises’ top-line revenue, earnings per share (EPS) and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
CarMax $17.08 billion 0.69 $1.30 billion $3.50 18.39
Rush Enterprises $4.19 billion 0.35 $250.44 million $1.31 28.42

CarMax has higher revenue and earnings than Rush Enterprises. CarMax is trading at a lower price-to-earnings ratio than Rush Enterprises, indicating that it is currently the more affordable of the two stocks.

Institutional & Insider Ownership

76.7% of Rush Enterprises shares are owned by institutional investors. 1.7% of CarMax shares are owned by company insiders. Comparatively, 11.2% of Rush Enterprises shares are owned by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a company will outperform the market over the long term.

Analyst Ratings

This is a summary of current ratings and recommmendations for CarMax and Rush Enterprises, as reported by MarketBeat.com.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
CarMax 1 4 7 0 2.50
Rush Enterprises 0 2 1 0 2.33

CarMax presently has a consensus target price of $68.73, suggesting a potential upside of 6.75%. Rush Enterprises has a consensus target price of $35.67, suggesting a potential downside of 4.20%. Given CarMax’s stronger consensus rating and higher probable upside, equities analysts plainly believe CarMax is more favorable than Rush Enterprises.

Summary

CarMax beats Rush Enterprises on 11 of the 14 factors compared between the two stocks.

CarMax Company Profile

CarMax, Inc. (CarMax) is a holding company. The Company is a retailer of used vehicles. The Company operates through two segments: CarMax Sales Operations and CarMax Auto Finance (CAF). The Company’s CarMax Sales Operations segment consists of all aspects of its auto merchandising and service operations, excluding financing provided by CAF. The Company’s CAF segment consists of its own finance operation that provides vehicle financing through CarMax stores. The Company operates approximately 160 used car stores in over 70 metropolitan markets. The Company’s products and services include retail merchandising, wholesale auctions, extended protection plans (EPPs), reconditioning and service, and customer credit. The Company’s CarMax Sales Operations segment sells used vehicles, purchases used vehicles from customers and other sources, sells related products and services, and arranges financing options for customers. CAF operates in the auto finance sector of the consumer finance market.

Rush Enterprises Company Profile

Rush Enterprises, Inc. is an integrated retailer of commercial vehicles and related services. The Company operates through the Truck Segment, which includes its operation of a regional network of commercial vehicle dealerships under the name Rush Truck Centers. Through its Rush Truck Centers, it offers services, including retail sales of new and used commercial vehicles, aftermarket parts sales, service and repair facilities, financing, leasing and rental, and insurance products. As of December 31, 2016, the Company operated 100 Rush Truck Centers in 21 states. The Company’s Rush Truck Centers are located in Alabama, Arizona, California, Colorado, Florida, Georgia, Idaho, Kentucky, Missouri, Nevada, New Mexico, North Carolina, Ohio, Oklahoma, Tennessee, Texas, Utah and Virginia. Its Rush Truck Leasing provides full-service maintenance on customers’ vehicles. At Rush Truck Centers, it offers third-party financing to assist customers in purchasing new and used commercial vehicles.

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