Is Carvana Stock a Buy After Crushing Q4 Expectations?

Core Insights - Carvana reported record Q4 and full-year results, with stock increasing by 3% following the announcement [1] - The company sold 163,522 vehicles in Q4 and nearly 600,000 vehicles in 2025, marking a 43% year-over-year growth [1][2] Q4 Results - Q4 sales reached $5.6 billion, a 58% increase from $3.54 billion in the same quarter last year, exceeding estimates by 7% [3] - Q4 EPS was $4.22, surpassing expectations of $1.13 by 273% and up from $0.56 per share a year ago [4] - Cash from operating activities increased by 617% year-over-year to $430 million, indicating strong cash generation [5] Full Year Results & Strategic Goals - Total sales for fiscal 2025 rose 49% to $20.3 billion from $13.67 billion in 2024, with net income increasing to $1.9 billion [9] - Full-year EPS surged 405% to a record $8.04, compared to $1.59 per share in 2024 [9] - Carvana aims for significant growth in retail units sold and adjusted EBITDA in 2026, with projected sequential increases in Q1 [10] Valuation Monitoring - Carvana stock is trading at a forward earnings multiple of 43X, closer to the S&P 500 benchmark and the Zacks Internet-Commerce Industry average [11] - The price to forward-sales ratio is under 3X, which is a discount compared to the S&P 500's 5X [11] Bottom Line - Carvana currently holds a Zacks Rank 3 (Hold), with potential for a buy rating as EPS revisions are expected to trend higher for FY26 [13] - The stock's pullback from its all-time high of $486 per share is seen as more attractive as bubble fears diminish [13]