William Nash Exercises Options, Realizes $2.66M

On December 26, it was revealed in an SEC filing that William Nash, President & CEO at CarMax KMX executed a significant exercise of company stock options.

What Happened: In an insider options sale disclosed in a Form 4 filing on Thursday with the U.S. Securities and Exchange Commission, Nash, President & CEO at CarMax, exercised stock options for 120,513 shares of KMX. The transaction value amounted to $2,655,503.

CarMax shares are trading down 0.11% at $85.08 at the time of this writing on Friday morning. Since the current price is $85.08, this makes Nash's 120,513 shares worth $2,655,503.

All You Need to Know About 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.

Financial Insights: CarMax

Decline in Revenue: Over the 3 months period, CarMax faced challenges, resulting in a decline of approximately -11.27% in revenue growth as of 30 November, 2024. This signifies a reduction in the company's top-line earnings. In comparison to its industry peers, the company trails behind with a growth rate lower than the average among peers in the Consumer Discretionary sector.

Navigating Financial Profits:

• Gross Margin: With a low gross margin of 10.89%, the company exhibits below-average profitability, signaling potential struggles in cost efficiency compared to its industry peers.

• Earnings per Share (EPS): With an EPS below industry norms, CarMax exhibits below-average bottom-line performance with a current EPS of 0.81.

Debt Management: The company maintains a balanced debt approach with a debt-to-equity ratio below industry norms, standing at 3.09.

Valuation Overview:

• Price to Earnings (P/E) Ratio: The current Price to Earnings ratio of 28.97 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 current P/S ratio of 0.51 is below industry norms, suggesting potential undervaluation and presenting an investment opportunity for those considering sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): Boasting an EV/EBITDA ratio of 18.22, CarMax demonstrates a robust market valuation, outperforming industry benchmarks.

Market Capitalization Analysis: With a profound presence, the company's market capitalization is above industry averages. This reflects substantial size and strong market recognition.

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Navigating the Impact of Insider Transactions on Investments

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

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.

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.

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