CarMax (KMX) Ready to Breakout?

A key level of resistance has emerged in CarMax’s (KMX) chart. If this level is surpassed, a breakout is expected…

CarMax Inc. (KMX) is one of the largest retailers of used vehicles in the United States. The company also offers customers a full range of related services such financing and the sale of extended warranties, accessories, and vehicle repair services.

The company is benefiting from an increased demand for used cars as new car manufacturing at many companies is behind schedule due to pandemic shutdowns and a worldwide chip shortage. Its omni-channel offerings have improved the customer shopping experience and should bolster revenues in the long-term.

KMX has a current ratio of 2.4, which means it has more than enough liquidity to handle short-term obligations. The company also has a respectable return on equity of 17.1%, which indicates efficiency.

In its most recent quarter, earnings per share were down slightly at 2.3% year over year. Though, revenue increased 21.4% year over year. The stock appears a bit overvalued with a forward P/E of 22.78.

KMX’s stock price has shown bullish long-term momentum, which has resulted in a Momentum Grade of A in our POWR Ratings system and is represented in the chart below.

Take a look at the 1-year chart of KMX below with added notations…

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