Notable Insider Move: Tyler Tuite Takes Part In Options Exercise At CarMax, Resulting In $43K

Disclosed in a recent SEC filing on January 30, Tuite, SVP & Chief Product Officer at CarMax KMX, made a noteworthy transaction involving the exercise of company stock options.

What Happened: A notable Form 4 filing on Thursday with the U.S. Securities and Exchange Commission revealed that Tuite, SVP & Chief Product Officer at CarMax, exercised stock options for 4,869 shares of KMX, resulting in a transaction value of $43,674.

The Friday morning market activity shows CarMax shares down by 0.01%, trading at $87.58. This implies a total value of $43,674 for Tuite's 4,869 shares.

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

Revenue Growth: CarMax's revenue growth over a period of 3 months has faced challenges. As of 30 November, 2024, the company experienced a revenue decline of approximately -11.27%. This indicates a decrease in the company's top-line earnings. As compared to its peers, the revenue growth lags behind its industry peers. The company achieved a growth rate lower than the average among peers in Consumer Discretionary sector.

Interpreting Earnings Metrics:

• Gross Margin: The company issues a cost efficiency warning with a low gross margin of 10.89%, indicating potential difficulties in maintaining profitability compared to its peers.

• Earnings per Share (EPS): CarMax's EPS reflects a decline, falling below the industry average with a current EPS of 0.81.

Debt Management: CarMax's debt-to-equity ratio is below the industry average at 3.09, reflecting a lower dependency on debt financing and a more conservative financial approach.

Valuation Analysis:

• Price to Earnings (P/E) Ratio: A higher-than-average P/E ratio of 29.79 suggests caution, as the stock may be overvalued in the eyes of investors.

• Price to Sales (P/S) Ratio: With a lower-than-average P/S ratio of 0.53, the stock presents an attractive valuation, potentially signaling a buying opportunity for investors interested in sales performance.

• EV/EBITDA Analysis (Enterprise Value to its Earnings Before Interest, Taxes, Depreciation & Amortization): With an EV/EBITDA ratio of 18.43, the company's market valuation exceeds industry averages.

Market Capitalization Analysis: The company's market capitalization surpasses industry averages, showcasing a dominant size relative to peers and suggesting a strong market position.

Now trade stocks online commission free with Charles Schwab, a trusted and complete investment firm.

Illuminating the Importance of Insider Transactions

While insider transactions should not be the sole basis for making investment decisions, they can play a significant role in an investor's decision-making process.

When discussing 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 stipulated in Section 12 of the Securities Exchange Act of 1934. This includes executives in the c-suite and significant hedge funds. Such insiders are required to report their transactions through a Form 4 filing, which must be completed within two business days of the transaction.

A new purchase by a company insider is a indication that they anticipate the stock will rise.

On the other hand, insider sells may not necessarily indicate a bearish view and can be motivated by various factors.

A Deep Dive into Insider 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.

Insider Buying Alert: Profit from C-Suite Moves

Benzinga Edge reveals every insider trade in real-time. Don't miss the next big stock move driven by insider confidence. Unlock this ultimate sentiment indicator now. Click here for access.

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