Why CarMax's Shares Popped

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Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of auto retailer CarMax (NYS: KMX) jumped as much as 13% today on a positive analyst report.

So what: ITG Research said that retail revenue growth is greater than expected and could set the company up to beat expectations. The company's tracking says that retail revenue growth is 16.7% versus an expectation of 13.3%.


Now what: ITG's numbers may turn out to be true but I would rather see strong data from the company before buying on a projection like this. Shares are trading at 16 times forward earnings, so if revenue is growing faster than expected then there could be a nice upside, but I'll wait to hear from management. Shares have lost some of their early gains, and like many analyst-induced pops I don't think today's will last.

Interested in more info on CarMax? Add it to your watchlist by clicking here.

The article Why CarMax's Shares Popped originally appeared on Fool.com.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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