CarMax (NYSE:KMX) vs. Valvoline (NYSE:VVV) Critical Contrast

CarMax (NYSE:KMX) and Valvoline (NYSE:VVV) are both mid-cap retail/wholesale companies, but which is the better business? We will compare the two companies based on the strength of their earnings, analyst recommendations, profitability, risk, valuation, institutional ownership and dividends.

Profitability

This table compares CarMax and Valvoline’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CarMax	2.09%	9.11%	2.08%
Valvoline	16.43%	84.85%	8.46%

Earnings & Valuation

This table compares CarMax and Valvoline”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CarMax	$26.35 billion	0.31	$500.56 million	$3.62	15.26
Valvoline	$1.62 billion	3.04	$211.50 million	$2.06	18.78

CarMax has higher revenue and earnings than Valvoline. CarMax is trading at a lower price-to-earnings ratio than Valvoline, indicating that it is currently the more affordable of the two stocks.

Analyst Recommendations

This is a summary of current recommendations and price targets for CarMax and Valvoline, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CarMax	1	3	9	1	2.71
Valvoline	0	5	9	1	2.73

CarMax currently has a consensus price target of $83.0833, indicating a potential upside of 50.39%. Valvoline has a consensus price target of $42.3077, indicating a potential upside of 9.34%. Given CarMax’s higher probable upside, research analysts clearly believe CarMax is more favorable than Valvoline.

Volatility & Risk

CarMax has a beta of 1.36, indicating that its share price is 36% more volatile than the S&P 500. Comparatively, Valvoline has a beta of 1.17, indicating that its share price is 17% more volatile than the S&P 500.

Institutional and Insider Ownership

96.1% of Valvoline shares are held by institutional investors. 1.7% of CarMax shares are held by company insiders. Comparatively, 0.7% of Valvoline shares are held by company insiders. Strong institutional ownership is an indication that large money managers, hedge funds and endowments believe a stock is poised for long-term growth.

Summary

Valvoline beats CarMax on 7 of the 13 factors compared between the two stocks.

About CarMax

CarMax, Inc., through its subsidiaries, operates as a retailer of used vehicles and related products in the United States. It operates in two segments: CarMax Sales Operations and CarMax Auto Finance. The CarMax Sales Operations segment offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; used vehicle auctions; extended protection plans to customers at the time of sale; and reconditioning and vehicle repair services. The CarMax Auto Finance segment provides financing alternatives for retail customers across a range of credit spectrum and arrangements with various financial institutions. The company was founded in 1993 and is based in Richmond, Virginia.

About Valvoline

Valvoline Inc. engages in the operation and franchising of vehicle service centers and retail stores in the United States and Canada. The company, through its service centers, provides fluid exchange for motor oil, transmission and differential fluid, and coolant; parts replacement for batteries, filters, wiper blades, and belts; and safety services, such as tire inflation and rotation, bulbs, and safety checks. It offers its services for passenger cars, hybrid and battery electric vehicles, and light and medium duty vehicles. The company was founded in 1866 and is headquartered in Lexington, Kentucky.