CarMax (MEX:KMX) ROC % : -0.63% (As of Aug. 2024)

View and export this data going back to 2014. Start your Free Trial

What is CarMax ROC %?

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. CarMax's annualized return on capital (ROC %) for the quarter that ended in Aug. 2024 was -0.63%.

As of today (2024-12-14), CarMax's WACC % is 7.54%. CarMax's ROC % is -0.90% (calculated using TTM income statement data). CarMax earns returns that do not match up to its cost of capital. It will destroy value as it grows.

CarMax ROC % Historical Data

The historical data trend for CarMax's ROC % 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 ROC % Chart

CarMax Annual Data

Trend

Feb15

Feb16

Feb17

Feb18

Feb19

Feb20

Feb21

Feb22

Feb23

Feb24

ROC %

Get a 7-Day Free Trial

2.27

1.08

1.87

-0.91

-0.60

CarMax Quarterly Data
	Nov19	Feb20	May20	Aug20	Nov20	Feb21	May21	Aug21	Nov21	Feb22	May22	Aug22	Nov22	Feb23	May23	Aug23	Nov23	Feb24	May24	Aug24
ROC %	Get a 7-Day Free Trial															-0.68	-1.15	-1.79	-0.15	-0.63

CarMax ROC % Calculation

CarMax's annualized Return on Capital (ROC %) for the fiscal year that ended in Feb. 2024 is calculated as:

	ROC % (A: Feb. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (A: Feb. 2023 )	+	Invested Capital (A: Feb. 2024 ))	/ count )
=	-3509.155 * ( 1 - 25.31% )	/	( (450597.631	+	429264.161)	/ 2 )
=	-2620.9878695	/	439930.896
=	-0.60 %

where

	Invested Capital		(A: Feb. 2023 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	480322.292	-	23950.425	-	( 5774.236	-	max(0, 35558.315	-	92483.878	+	5774.236	))
=	450597.631

	Invested Capital		(A: Feb. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	463922.963	-	24865.088	-	( 9793.714	-	max(0, 39443.026	-	89155.24	+	9793.714	))
=	429264.161

CarMax's annualized Return on Capital (ROC %) for the quarter that ended in Aug. 2024 is calculated as:

	ROC % (Q: Aug. 2024 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: May. 2024 )	+	Invested Capital (Q: Aug. 2024 ))	/ count )
=	-3939.896 * ( 1 - 25.32% )	/	( (435568.898	+	497972.881)	/ 2 )
=	-2942.3143328	/	466770.8895
=	-0.63 %

where

	Invested Capital		(Q: May. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	462952.145	-	23662.734	-	( 3720.513	-	max(0, 33748.3	-	84465.397	+	3720.513	))
=	435568.898

	Invested Capital		(Q: Aug. 2024 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	538423.904	-	30101.699	-	( 10349.324	-	max(0, 42524.331	-	95847.353	+	10349.324	))
=	497972.881

Note: The Operating Income data used here is four times the quarterly (Aug. 2024) data.

CarMax (MEX:KMX) ROC % Explanation

ROC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROIC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.

There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.

Why is ROC % important?

Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.

As of today, CarMax's WACC % is 7.54%. CarMax's ROC % is -0.90% (calculated using TTM income statement data). CarMax earns returns that do not match up to its cost of capital. It will destroy value as it grows.

Be Aware

Like ROE % and ROA %, ROC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.

CarMax ROC % Related Terms

Thank you for viewing the detailed overview of CarMax's ROC % provided by GuruFocus.com. Please click on the following links to see related term pages.

CarMax Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Consumer Cyclical » Vehicles & Parts » CarMax Inc (MEX:KMX) » Definitions » ROC %

Comparable Companies

Traded in Other Exchanges

KMX:USA 0HTQ:UK XA4:Germany

Address

12800 Tuckahoe Creek Parkway, Richmond, VA, USA, 23238

Website

https://www.carmax.com

CarMax sells, finances, and services used and new cars through a chain of around 250 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 (79% in fiscal 2024 due to the chip shortage) and wholesale about 13% (19% in fiscal 2024), with the remaining portion composed of extended service plans and repair. In fiscal 2024, the company retailed and wholesaled 765,572, and 546,331 used vehicles, respectively. CarMax is the largest used-vehicle retailer in the US but still estimates that it had only about 3.7% US market share of vehicles 0-10 years old in 2023. It seeks over 5% share a few years from now. CarMax is based in Richmond, Virginia.