Insider Unloading: Jill Livesay Sells Options, Realizes $255K

Highlighted on July 30, it was unveiled in an SEC filing that Livesay, VP at CarMax KMX, executed a significant transaction involving the exercise of company stock options.

What Happened: The latest Form 4 filing on Tuesday with the U.S. Securities and Exchange Commission uncovered Livesay, VP at CarMax, exercising stock options for 12,000 shares of KMX. The total transaction was valued at $255,359.

The latest update on Wednesday morning shows CarMax shares down by 0.0%, trading at $84.32. At this price, Livesay's 12,000 shares are worth $255,359.

Unveiling the Story Behind CarMax

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.

CarMax: Delving into Financials

Revenue Challenges: CarMax's revenue growth over 3 months faced difficulties. As of 31 May, 2024, the company experienced a decline of approximately -7.46%. This indicates a decrease in top-line earnings. As compared to competitors, the company encountered difficulties, with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Evaluating Earnings Performance:

• Gross Margin: The company faces challenges with a low gross margin of 11.13%, suggesting potential difficulties in cost control and profitability compared to its peers.

• Earnings per Share (EPS): CarMax's EPS lags behind the industry average, indicating concerns and potential challenges with a current EPS of 0.97.

Debt Management: CarMax's debt-to-equity ratio is below the industry average at 3.13, reflecting a lower dependency on debt financing and a more conservative financial approach.

Financial Valuation Breakdown:

• Price to Earnings (P/E) Ratio: The current Price to Earnings ratio of 33.07 is higher than the industry average, indicating the stock is priced at a premium level according to the market sentiment.

• Price to Sales (P/S) Ratio: The Price to Sales ratio is 0.51, which is lower than the industry average. This suggests a possible undervaluation based on sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an impressive EV/EBITDA ratio of 20.0, CarMax demonstrates exemplary market valuation, surpassing industry averages.

Market Capitalization: Exceeding industry standards, the company's market capitalization places it above industry average in size relative to peers. This emphasizes its significant scale and robust market position.

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Illuminating the Importance of Insider Transactions

Insider transactions shouldn't be used primarily to make an investing decision, however an insider transaction can be an important factor in the investing decision.

In the context of legal matters, the term "insider" refers to any officer, director, or beneficial owner holding more than ten percent of a company's equity securities, as outlined by Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are obligated to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

Pointing towards optimism, a company insider's new purchase signals their positive anticipation for the stock to rise.

Despite insider sells not always signaling a bearish sentiment, they can be driven by various factors.

The Insider's Guide to Important Transaction Codes

Examining transactions, investors often concentrate on those unfolding in the open market, meticulously detailed in Table I of the Form 4 filing. A P in Box 3 denotes a purchase, while S signifies a sale. Transaction code C indicates the conversion of an option, and transaction code A denotes a grant, award, or other acquisition of securities from the company.

Check Out The Full List Of CarMax's Insider Trades.

This article was generated by Benzinga's automated content engine and reviewed by an editor.