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KMX (CarMax) Altman Z-Score : 1.77 (As of Oct. 31, 2024)


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What is CarMax Altman Z-Score?

The Altman Z-Score is a model designed to predict the likelihood of a company going bankrupt within the next two years. Created by American finance professor Edward Altman in 1968, the model is specifically designed for publicly traded manufacturing companies with assets greater than $1 million.

Warning Sign:

Altman Z-score of 1.78 is in distress zone. This implies bankruptcy possibility in the next two years.

CarMax has a Altman Z-Score of 1.77, indicating it is in Distress Zones. This implies bankrupcy possibility in the next two years.

The zones of discrimination were as such:

When Altman Z-Score <= 1.8, it is in Distress Zones.
When Altman Z-Score >= 3, it is in Safe Zones.
When Altman Z-Score is between 1.8 and 3, it is in Grey Zones.

The historical rank and industry rank for CarMax's Altman Z-Score or its related term are showing as below:

KMX' s Altman Z-Score Range Over the Past 10 Years
Min: 1.78   Med: 2.01   Max: 2.51
Current: 1.78

During the past 13 years, CarMax's highest Altman Z-Score was 2.51. The lowest was 1.78. And the median was 2.01.


CarMax Altman Z-Score Historical Data

The historical data trend for CarMax's Altman Z-Score 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 Altman Z-Score Chart

CarMax Annual Data
Trend Feb15 Feb16 Feb17 Feb18 Feb19 Feb20 Feb21 Feb22 Feb23 Feb24
Altman Z-Score
Get a 7-Day Free Trial Premium Member Only Premium Member Only 1.99 2.09 2.33 1.93 1.84

CarMax Quarterly Data
Nov19 Feb20 May20 Aug20 Nov20 Feb21 May21 Aug21 Nov21 Feb22 May22 Aug22 Nov22 Feb23 May23 Aug23 Nov23 Feb24 May24 Aug24
Altman Z-Score Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 1.84 1.78 1.84 1.78 1.83

Competitive Comparison of CarMax's Altman Z-Score

For the Auto & Truck Dealerships subindustry, CarMax's Altman Z-Score, along with its competitors' market caps and Altman Z-Score 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's Altman Z-Score Distribution in the Vehicles & Parts Industry

For the Vehicles & Parts industry and Consumer Cyclical sector, CarMax's Altman Z-Score distribution charts can be found below:

* The bar in red indicates where CarMax's Altman Z-Score falls into.



CarMax Altman Z-Score Calculation

Altman Z-Score model is an accurate forecaster of failure up to two years prior to distress. It can be considered the assessment of the distress of industrial corporations.

CarMax's Altman Z-Score for today is calculated with this formula:

Z=1.2*X1+1.4*X2+3.3*X3+0.6*X4+1.0*X5
=1.2*0.099+1.4*0.1552+3.3*0.0514+0.6*0.531+1.0*0.9489
=1.77

* 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. GuruFocus does not calculate Altman Z-Score when X4 or X5 value is 0.

Trailing Twelve Months (TTM) ended in Aug. 2024:
Total Assets was $27,296 Mil.
Total Current Assets was $4,859 Mil.
Total Current Liabilities was $2,156 Mil.
Retained Earnings was $4,237 Mil.
Pre-Tax Income was 177.844 + 206.64 + 65.511 + 110.558 = $561 Mil.
Interest Expense was -220.721 + -213.662 + -205.334 + -201.465 = $-841 Mil.
Revenue was 7013.529 + 7113.397 + 5626.603 + 6148.538 = $25,902 Mil.
Market Cap (Today) was $11,213 Mil.
Total Liabilities was $21,116 Mil.

* Note that for stock reported semi-annually or annually, GuruFocus uses latest annual data as the TTM data.

X1=Working Capital/Total Assets
=(Total Current Assets - Total Current Liabilities)/Total Assets
=(4859.056 - 2155.804)/27295.818
=0.099

X2=Retained Earnings/Total Assets
=4236.501/27295.818
=0.1552

X3=Earnings Before Interest and Taxes/Total Assets
=(Pre-Tax Income - Interest Expense)/Total Assets
=(560.553 - -841.182)/27295.818
=0.0514

X4=Market Value Equity/Book Value of Total Liabilities
=Market Cap/Total Liabilities
=11213.424/21116.209
=0.531

X5=Revenue/Total Assets
=25902.067/27295.818
=0.9489

The zones of discrimination were as such:

Distress Zones - 1.81 < Grey Zones < 2.99 - Safe Zones

CarMax has a Altman Z-Score of 1.77 indicating it is in Distress Zones.

Study by Altman found that companies that are in Distress Zone have more than 80% of chances of bankruptcy in two years.


CarMax  (NYSE:KMX) Altman Z-Score Explanation

X1: The Working Capital/Total Assets (WC/TA) ratio is a measure of the net liquid assets of the firm relative to the total capitalization. Working capital is defined as the difference between current assets and current liabilities. Ordinarily, a firm experiencing consistent operating losses will have shrinking current assets in relation to total assets. Altman found this one proved to be the most valuable liquidity ratio comparing with the current ratio and the quick ratio. This is however the least significant of the five factors.

X2: Retained Earnings/Total Assets: the RE/TA ratio measures the leverage of a firm. Retained earnings is the account which reports the total amount of reinvested earnings and/or losses of a firm over its entire life. Those firms with high RE, relative to TA, have financed their assets through retention of profits and have not utilized as much debt.

X3, Earnings Before Interest and Taxes/Total Assets (EBIT/TA): This ratio is a measure of the true productivity of the firm's assets, independent of any tax or leverage factors. Since a firm's ultimate existence is based on the earning power of its assets, this ratio appears to be particularly appropriate for studies dealing with corporate failure. This ratio continually outperforms other profitability measures, including cash flow.

X4, Market Value of Equity/Book Value of Total Liabilities (MVE/TL): The measure shows how much the firm's assets can decline in value (measured by market value of equity plus debt) before the liabilities exceed the assets and the firm becomes insolvent.

X5, Revenue/Total Assets (S/TA): The capital-turnover ratio is a standard financial ratio illustrating the sales generating ability of the firm's assets.

Read more about Altman Z-Score and the original research.


Be Aware

Altman Z-Score does not apply to financial companies.


CarMax Altman Z-Score Related Terms

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


CarMax Business Description

Traded in Other Exchanges
Address
12800 Tuckahoe Creek Parkway, Richmond, VA, USA, 23238
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.
Executives
Jill A Livesay officer: VP, Controller & PAO CARMAX, INC., 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Mohammad Shamim officer: SVP and CIO 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Charles Joseph Wilson officer: SVP 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Enrique N Mayor-mora officer: SVP & CFO 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
William D Nash officer: EVP, HR & Admin Services 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Jon G Daniels officer: SVP, CAF 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Diane L Cafritz officer: SVP & CHRO 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Darren C Newberry officer: SVP 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
James Lyski officer: SVP & Chief Marketing Officer CARMAX, 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Ronald E Blaylock director
Edwin J Hill officer: SVP 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Eric M Margolin officer: SVP, Gen. Counsel & Secretary CARMAX, 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Thomas J Folliard officer: Executive Vice President 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238
Reedy Thomas W Jr officer: SVP & CFO 12800 TUCKHOE CREEK PARKWAY, RICHMOND VA 23238
Mark F Oneil director C/O CARMAX, INC., 12800 TUCKAHOE CREEK PARKWAY, RICHMOND VA 23238