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GuruFocus has detected 2 Warning Signs with CarMax Inc $KMX.
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CarMax Inc (NYSE:KMX)
Enterprise Value
$23,717 Mil (As of Today)

Think of enterprise value as the theoretical takeover price. It is more comprehensive than market capitalization (market cap), which only includes common equity. Enterprise Value is calculated as the market cap plus debt and minority interest and preferred shares, minus total cash and cash equivalents.

EV/EBIT ratio is calculated as enterprise value divided by its EBIT. As of today, CarMax Inc's enterprise value is $23,717 Mil. CarMax Inc's earnings before interest and taxes (EBIT) for the trailing twelve months (TTM) ended in May. 2017 was $1,124 Mil. Therefore, CarMax Inc's EV/EBIT ratio for today is 21.10.

EV/EBITDA ratio is calculated as enterprise value divided by its EBITDA. As of today, CarMax Inc's enterprise value is $23,717 Mil. CarMax Inc's earnings before depreciation and amortization for the trailing twelve months (TTM) ended in May. 2017 was $1,296 Mil. Therefore, CarMax Inc's EV/EBITDA ratio for today is 18.30.

EV/Revenue ratio is calculated as enterprise value divided by its Revenue. As of today, CarMax Inc's enterprise value is $23,717 Mil. CarMax Inc's revenue for the trailing twelve months (TTM) ended in May. 2017 was $16,291 Mil. Therefore, CarMax Inc's EV/Revenue ratio for today is 1.46.


Definition

Enterprise Value is calculated as the market cap plus debt and minority interest and preferred shares, minus total cash and cash equivalents.

CarMax Inc's Enterprise Value for the fiscal year that ended in Feb. 2017 is calculated as

Enterprise Value (A: Feb. 2017 )
=Market Cap+Preferred Stock+Long-Term Debt & Capital Lease Obligation
=12039.937+0+11826.438
+Current Portion of Long-Term Debt+Minority Interest-Cash and Cash Equivalents
+343.266+0-38.416
=24,171

CarMax Inc's Enterprise Value for the quarter that ended in May. 2017 is calculated as

Enterprise Value (Q: May. 2017 )
=Market Cap+Preferred Stock+Long-Term Debt & Capital Lease Obligation
=11636.7443+0+11925.87
+Current Portion of Long-Term Debt+Minority Interest-Cash and Cash Equivalents
+349.297+0-60.08
=23,852

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Explanation

When an investor buy a company, the investor needs to pay not only the common shares, he/she also needs to pay the shareholders of Preferred Stocks. He also assumes the debt of the company, and receives the cash on the company's balance sheet.

If a company has more cash than debt, the investor actually pays less than the Market Cap because he immediately owns the cash once the transaction goes through.

The market value of Preferred Stock needs to be added to the market value of common stocks in the calculation of enterprise value.

For the companies with the same Market Cap, the smaller the Enterprise Value is, the cheaper the company is.

Enterprise Value can be negative when the company's net cash is more than its Market Cap. In this case the investor is basically getting the company for free and get paid for that.

1. EV/EBIT ratio is calculated as enterprise value divided by its EBIT.

CarMax Inc's EV/EBIT for today is

CarMax Inc's current Enterprise Value is $23,717 Mil.
CarMax Inc's Earnings Before Interest and Taxes (EBIT) for the trailing twelve months (TTM) ended in May. 2017 was 275.64 (Aug. 2016 ) + 234.732 (Nov. 2016 ) + 258.668 (Feb. 2017 ) + 354.891 (May. 2017 ) = $1,124 Mil.

2. EV/EBITDA ratio is calculated as enterprise value divided by its EBITDA.

CarMax Inc's EV/EBITDA for today is:

CarMax Inc's current Enterprise Value is $23,717 Mil.
CarMax Inc's Earnings Before Depreciation and Amortization for the trailing twelve months (TTM) ended in May. 2017 was 317.852 (Aug. 2016 ) + 277.373 (Nov. 2016 ) + 301.889 (Feb. 2017 ) + 398.785 (May. 2017 ) = $1,296 Mil.

3. EV/Revenue ratio is calculated as enterprise value divided by its Revenue.

CarMax Inc's EV/Revenue for today is:

EV/Revenue ratio=Enterprise Value (Today)/Revenue (TTM)
=23716.607/16291.066
=1.46

CarMax Inc's current Enterprise Value is $23,717 Mil.
CarMax Inc's Earnings Before Depreciation and Amortization for the trailing twelve months (TTM) ended in May. 2017 was 3997.248 (Aug. 2016 ) + 3701.524 (Nov. 2016 ) + 4049.96 (Feb. 2017 ) + 4542.334 (May. 2017 ) = $16,291 Mil.

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.


Related Terms

Market Cap, Preferred Stock, Long-Term Debt & Capital Lease Obligation, Cash and Cash Equivalents, Current Portion of Long-Term Debt


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

CarMax Inc Annual Data

Feb08Feb09Feb10Feb11Feb12Feb13Feb14Feb15Feb16Feb17
ev 4,3292,2654,63611,99211,58014,43717,69223,09919,60624,171

CarMax Inc Quarterly Data

Feb15May15Aug15Nov15Feb16May16Aug16Nov16Feb17May17
ev 23,09923,95922,23521,89319,60621,12222,43022,61224,17123,852
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