LAD - Long CarMax: Accelerating Into Top Gear
By Team Berkshire Capital: Shehryar Khursheed, Tom Yuz
Current Price (as of March 5, 2019): $60.75 |Base: $96.20| Bear: $70.48 | Bull: $111.15
Investment Recommendation:
We advocate a long position in CarMax (KMX) for the following reasons: (1) The Street's failure to disaggregate KMX's market share into mature and developing markets significantly underestimates long-run market share potential, (2) the market's failure to adjust for KMX's CAF business when performing peer comparisons overlooks KMX's superior return profile, (3) near-term dysphoria with the auto-market cycle obscures KMX's operating model as a long-term value compounder. Our preliminary