Gross Margin % is calculated as gross profit divided by its revenue. CarMax's Gross Profit for the
three
months ended in May. 2023 was $817 Mil. CarMax's Revenue for the
three
months ended in May. 2023 was $7,687 Mil. Therefore, CarMax's Gross Margin % for the quarter that ended in May. 2023 was 10.63%.
Warning Sign:
CarMax Inc gross margin has been in long-term decline. The average rate of decline per year is -7.5%.
The historical rank and industry rank for CarMax's Gross Margin % or its related term are showing as below:
KMX'
s Gross Margin % Range Over the Past 10 Years
Min: 9.43 Med: 13.28 Max: 13.75
Current: 9.77
During the past 13 years, the highestGross Margin % of CarMax was 13.75%. The lowest was 9.43%. And the median was 13.28%.
KMX's Gross Margin % is ranked worse than 83.2% of 1250
companies
in the Vehicles & Parts industry
Industry Median: 18.78
vs KMX: 9.77
CarMax had a gross margin of 10.63% for the quarter that ended in May. 2023 => No sustainable competitive advantage
The 5-Year average Growth Rate of Gross Margin for CarMax was -7.50% per year.
CarMax Gross Margin % Historical Data
The historical data trend for CarMax's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
* Premium members only.
CarMax Annual Data
Trend
Feb14
Feb15
Feb16
Feb17
Feb18
Feb19
Feb20
Feb21
Feb22
Feb23
Gross Margin %
13.65
13.40
12.55
10.31
9.43
CarMax Quarterly Data
Aug18
Nov18
Feb19
May19
Aug19
Nov19
Feb20
May20
Aug20
Nov20
Feb21
May21
Aug21
Nov21
Feb22
May22
Aug22
Nov22
Feb23
May23
Gross Margin %
9.40
9.05
8.86
10.68
10.63
Competitive Comparison
For the Auto & Truck Dealerships subindustry, CarMax's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
CarMax Gross Margin % Distribution
For the Vehicles & Parts industry and Consumer Cyclical sector, CarMax's Gross Margin % distribution charts can be found below:
* The bar in red indicates where CarMax's Gross Margin % falls in comparison to its industry or sector. The grey bar indicates the Gross Margin %'s extreme value range as defined by GuruFocus.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
CarMax (NYSE:KMX) Gross Margin % Explanation
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
CarMax had a gross margin of 10.63% for the quarter that ended in May. 2023 => No sustainable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
CarMax Gross Margin % Related Terms
Thank you for viewing the detailed overview of CarMax's Gross Margin % provided by GuruFocus.com. Please click on the following links to see related term pages.
CarMax sells, finances, and services used and new cars through a chain of about 240 used retail stores. It was formed in 1993 as a unit of Circuit City and spun off into an independent company in late 2002. Used-vehicle sales typically account for about 83% of revenue (78% in fiscal 2023 due to the chip shortage) and wholesale about 13% (20% in fiscal 2023), with the remaining portion composed of extended service plans and repair. In fiscal 2023, the company retailed and wholesaled 807,823, and 585,071 used vehicles, respectively. CarMax is the largest used-vehicle retailer in the U.S. but still estimates that it has only about 4% U.S. market share of vehicles 0-10 years old in 2022. It seeks over 5% share by the end of calendar 2025. CarMax is based in Richmond, Virginia.
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