Is Carvana Stock Worth Buying at a 2.58X Price-to-Sales Ratio?

Core Viewpoint - Carvana (CVNA) shares are currently trading at a premium with a Value Score of F, reflecting a forward 12-month price/sales ratio of 2.58X, significantly higher than the auto sector's average of 1.35X [1][4]. Group 1: Retail Sales Performance - CVNA's retail unit sales increased by 50.3% in Q4 2024, totaling 114,379 units, driven by strong demand [5]. - The company anticipates a sequential increase in year-over-year growth of retail unit sales in Q1 2025 [6]. Group 2: Strategic Acquisition - The acquisition of ADESA's U.S. operations has enhanced CVNA's logistics network and auction capabilities, improving refurbishment processes [7]. - Carvana has integrated its operations at 6 of 56 ADESA locations, with a capital expenditure budget of approximately $140 million for 2025, primarily for additional site integrations [8]. Group 3: Operational Efficiency - CVNA reported an adjusted EBITDA margin of 10.1% in 2024, marking the most profitable year for any public automotive retailer [10]. - The company has reduced retail reconditioning and inbound transport costs through various operational improvements [11]. Group 4: Stock Performance - CVNA shares have surged by 209.2% over the trailing 12 months, outperforming the auto sector and S&P's gains of 3.5% and 19.1%, respectively [12]. - The Zacks Consensus Estimate for CVNA's Q1 2025 revenues is$ 3.93 billion, indicating a year-over-year growth of 28.24% [13]. Group 5: Earnings Projections - The full-year 2025 revenue estimate for CVNA is $16.78 billion, reflecting a year-over-year growth of 22.72% [14]. - The consensus EPS for 2025 is projected at$ 3.15, having increased by 10.5% over the past week [14]. Group 6: Investment Outlook - Despite the premium valuation, CVNA's solid retail growth prospects, operational improvements, and robust earnings growth projections suggest a favorable investment opportunity [15].