Core Viewpoint - Stock splits can lead to significant positive returns for shares, with an average return of over 25% in the 52 weeks following a split, compared to the S&P 500's average return of under 12% [1][2] Group 1: O'Reilly Automotive - O'Reilly Automotive executed a 15-for-1 stock split, reducing its share price by over 93% from above $1,300 to around $89, making it more accessible for retail investors [3][4][5] - The current price forecast for O'Reilly Automotive is $94.30, indicating a potential upside of 7.36% based on 18 analyst ratings [3][5] Group 2: Interactive Brokers Group - Interactive Brokers performed a 4-for-1 stock split, lowering its share price from just over $200 to around $52, which increases accessibility but may have a limited positive impact [6][8] - The 12-month stock price forecast for Interactive Brokers is $53.38, suggesting a modest upside of 0.55% based on 8 analyst ratings [6][9] Group 3: Pegasystems - Pegasystems executed a 2-for-1 stock split, with the share price moving from just over $100 to around $52, which does not significantly impact its valuation [10][11] - The current price forecast for Pegasystems is $53.36, indicating a potential upside of 4.18% based on 12 analyst ratings [10][11] - Pegasystems has seen substantial growth, with annual contracted revenues increasing over three times to $1.4 billion and free cash flow margins exceeding 42% [12] - The company's GenAI Blueprint tool is expected to drive significant adoption in the second half of 2025, which could enhance its stock performance beyond the effects of the stock split [13][15]

Financial Performance - In Q1 2025, Carvana achieved a new company retail unit sales record of 133,898[11] - Carvana reported a net income of $373 million with a net income margin of 8.8% in Q1 2025[11] - The company's GAAP operating income was $394 million, resulting in a GAAP operating margin of 9.3% in Q1 2025[11] - Adjusted EBITDA for Q1 2025 reached $488 million, with an Adjusted EBITDA margin of 11.5%[11] - Carvana has consistently driven Adjusted EBITDA margin within its 2018 long-term financial model range of 8% to 13.5% for four consecutive quarters[24, 25] Growth and Strategy - Carvana's retail units sold grew 46% year-over-year, with an Adjusted EBITDA margin 2x the industry average among public automotive retailers[12] - The company aims to sell 3 million retail units per year at an Adjusted EBITDA margin of 13.5% within 5 to 10 years[26] - Carvana is expanding its production locations, expecting to have 34-36 locations by year-end at a capital expenditure of $2 to $3 million per site[40] Market Position - E-commerce adoption in the U S used vehicle market is still in an early stage, with Carvana representing approximately 1% of the market[18] - Carvana is focused on improving customer offering, increasing awareness and trust, and expanding selection to drive growth[14, 17, 20]

Core Viewpoint - Carvana Inc. has made a significant recovery from near collapse in 2022, with its stock increasing over 1000% in 2023 and an additional 284% last year, outperforming peers in the used car retail industry [1][4]. Financial Performance - Carvana's stock has surged 59% year-to-date, significantly outperforming competitors like CarMax and Lithia Motors, which saw declines of 15% and 5% respectively [1][7]. - The company has achieved the highest adjusted EBITDA margin among public car dealers at 11.5% [4][7]. - In the last reported quarter, Carvana's retail sales increased by 46% year-over-year, and earnings per share more than doubled [12]. Strategic Initiatives - The turnaround is attributed to a 2023 debt restructuring and a strategic shift towards operational efficiency rather than aggressive growth [4][10]. - Carvana aims to sell 3 million cars annually and achieve a 13.5% adjusted EBITDA margin in the long term [7][10]. - The acquisition of ADESA's U.S. operations is expected to enhance Carvana's reconditioning capacity, potentially doubling it to 3 million units annually [14]. Market Position and Valuation - Carvana is currently trading at a forward sales multiple of 3.41, which is significantly higher than industry averages and its own five-year average [7][10]. - Despite its high valuation, the premium reflects strong growth expectations and improving profitability [10][17]. Operational Efficiency - The company has streamlined operations, optimizing logistics and reducing costs, which has contributed to improved margins [13]. - In the last quarter, adjusted EBITDA reached a record $488 million, with gross profit per unit improving by 8% [13]. Future Outlook - The Zacks Consensus Estimate predicts a 32% growth in sales and a 214% increase in EPS for 2025 [16]. - Management's confidence in sustaining performance is evident, with a focus on meeting targets while managing debt levels [15][17].

Group 1 - Zacks Premium offers various tools for investors, including daily updates on Zacks Rank and Industry Rank, access to the Zacks 1 Rank List, Equity Research reports, and Premium stock screens to enhance investment confidence [1][2] - The Zacks Style Scores rate stocks based on value, growth, and momentum characteristics, providing complementary indicators to the Zacks Rank [2][3] Group 2 - The Value Score focuses on identifying undervalued stocks using ratios like P/E, PEG, Price/Sales, and Price/Cash Flow [3] - The Growth Score emphasizes a company's financial strength and future outlook, analyzing projected and historical earnings, sales, and cash flow [4] - The Momentum Score assesses trends in stock prices and earnings outlook, utilizing factors like one-week price change and monthly percentage change in earnings estimates [5] Group 3 - The VGM Score combines all three Style Scores, serving as an important indicator alongside the Zacks Rank to identify stocks with attractive value, growth forecasts, and promising momentum [6] - The Zacks Rank employs earnings estimate revisions to simplify the process of building a winning portfolio, with 1 (Strong Buy) stocks historically yielding an average annual return of +25.41% since 1988 [7][8] Group 4 - AutoNation, Inc. is a major automotive retailer in the U.S., providing vehicle sales, maintenance, parts, and financing services [12] - AutoNation holds a 3 (Hold) rating on the Zacks Rank, with a VGM Score of A and a Momentum Style Score of A, indicating strong performance potential [12][13] - The company's shares have increased by 8.4% over the past four weeks, with upward revisions in earnings estimates for fiscal 2025, raising the Zacks Consensus Estimate by $0.46 to $18.75 per share [13]

Group 1 - The previous investment outlook for CarMax (NYSE: KMX) was a sell rating due to a lack of strong growth prospects and anticipated pressure on underlying demand despite digital enhancements [1] - The investment strategy focuses on long-term investments while also incorporating short-term shorts to identify alpha opportunities, emphasizing a bottom-up analysis of individual companies' fundamental strengths and weaknesses [1] - The investment duration is medium to long-term, aiming to identify companies with solid fundamentals, sustainable competitive advantages, and growth potential [1]

Core Viewpoint - Carvana has experienced a significant turnaround, achieving record highs in key metrics after a challenging period in 2022, with a notable increase in stock price and operational efficiency [1][5][6]. Group 1: Company Performance - Carvana's first quarter of 2025 saw revenue of $4.2 billion, a 38% increase year-over-year, and retail units sold reached 133,898, a 46% increase, both setting quarterly records [8]. - The company more than doubled its net income and adjusted EBITDA to $373 million and $488 million, respectively, while selling 14% more vehicles with 30% less inventory and 45% less advertising spend compared to previous highs [9]. - Carvana aims to sell 3 million vehicles annually with an adjusted EBITDA margin of 13.5% within five to ten years, requiring a compound annual growth rate (CAGR) of 20% to 40% [10][11]. Group 2: Market Position and Growth Potential - Carvana estimates it currently holds only 1% of the $1.2 trillion U.S. used-car market, indicating substantial growth potential [12]. - The company has a presence in over 300 markets, with 81% of the U.S. population within its delivery range, positioning it well for future expansion [12]. - Plans for a new auction and reconditioning "megasite" in Phoenix are expected to create approximately 200 jobs, indicating a ramp-up in operational capacity [13]. Group 3: Financial Health and Valuation - As of Q1 2025, Carvana had $5.3 billion in long-term debt, which remains a concern for its financial stability [14]. - The company trades at a price-to-earnings (P/E) ratio of 112, significantly higher than peers like CarMax, which has a P/E of 21, raising questions about its valuation [15]. - Analysts project a 206% increase in earnings per share (EPS) for 2025, reflecting high expectations that may not be sustainable [17].

Industry Trends - Meetings with top management of Group 1 Automotive Inc (GPI) and Penske Automotive Group Inc (PAG) highlighted industry trends in tariff responses by OEMs, new and used vehicle sales, and parts and service trends [1] - Both companies experienced increased buying by OEMs in anticipation of tariffs being imposed [2] Sales Performance - There was a sharp uptick in sales during late March, but the trend began to normalize by mid-April, establishing a new normalized run-rate by mid- to late-May and into June [3] - Consumer health remains resilient with strong in-store traffic [3] - The used car market continues to be challenging for both Group 1 Automotive and Penske Automotive [3] Stock Performance - Shares of Group 1 Automotive declined by 0.48% to $446.20, while Penske Automotive's stock increased by 1.25% to $177.56 at market close on Tuesday [4] Analyst Ratings - Analyst Rajat Gupta reiterated an Overweight rating and price target of $435 for Group 1 Automotive, while maintaining an Underweight rating and price target of $160 for Penske Automotive [1]

Company Overview - Group 1 Automotive, Inc. is a leading automotive retailer with operations primarily in the United States and the U.K., operating 150 dealerships in the U.S. and 55 in the U.K. [12] - The company sells new and used cars and light trucks, and also offers vehicle financing, insurance, service contracts, maintenance, repair services, and aftermarket automotive products [12]. Investment Ratings - Group 1 Automotive has a Zacks Rank of 3 (Hold) and a VGM Score of A, indicating a solid overall rating [13]. - The company has a Value Style Score of A, supported by attractive valuation metrics such as a forward P/E ratio of 10.96, which may appeal to value investors [13]. Earnings Estimates - In the last 60 days, four analysts have revised their earnings estimates upwards for fiscal 2025, with the Zacks Consensus Estimate increasing by $0.24 to $40.91 per share [13]. - Group 1 Automotive has an average earnings surprise of 4.4%, suggesting potential for positive performance [13]. Investment Consideration - With a solid Zacks Rank and top-tier Value and VGM Style Scores, Group 1 Automotive is recommended for investors' consideration [14].

Core Viewpoint - CarMax reported better-than-expected Q1 results, with revenue rising approximately 6% year-over-year to $7.55 billion and earnings exceeding predictions at $1.38 per share, leading to a nearly 6% surge in stock price [2] Financial Performance - CarMax experienced a 6.6% rise in same-store sales year-over-year during the quarter, indicating a positive shift after a slight decline over the past two years [2] - The company noted an improvement in gross margins, with retail gross profit per used unit nearing an all-time high due to increased demand and cost efficiencies [2] - Quarterly revenues grew 6.7% to $6.0 billion compared to $5.6 billion a year prior, contrasting with a 4.8% improvement for the S&P 500 [6] - CarMax's revenues have decreased 0.7% from $27 billion to $26 billion in the last 12 months, against a 5.5% growth for the S&P 500 [6] Valuation Comparison - CarMax's price-to-sales (P/S) ratio is 0.4 compared to 3.1 for the S&P 500, and its price-to-earnings (P/E) ratio stands at 19.7 versus 26.9 for the benchmark [6] - The current valuation of CarMax appears moderate when compared to its operational performance and financial health over recent years [3] Profitability Metrics - CarMax's operating income for the last four quarters was -$221 million, reflecting an operating margin of -0.8% [7] - The operating cash flow (OCF) for this period was $624 million, indicating an OCF margin of 2.4%, compared to 14.9% for the S&P 500 [7] - Net income for the four-quarter period was $501 million, resulting in a net income margin of 1.9%, against 11.6% for the S&P 500 [7] Financial Stability - CarMax's total debt was $19 billion at the end of the most recent quarter, with a market capitalization of $11 billion, leading to a debt-to-equity ratio of 194.8% compared to 19.4% for the S&P 500 [9] - Cash and cash equivalents amount to $247 million of the $27 billion in total assets, resulting in a cash-to-assets ratio of 0.9% [9] Downturn Resilience - KMX stock has historically performed worse than the S&P 500 during several downturns, indicating lower resilience in adverse market conditions [9] - The stock experienced a significant decline of 64.0% from a peak of $154.85 in November 2021 to $55.69 in October 2022, compared to a 25.4% drop for the S&P 500 [10] - During the COVID pandemic, KMX stock fell 56.6% from a high of $101.90 in February 2020 to $44.27 in March 2020, versus a 33.9% decline for the S&P 500 [11] Overall Assessment - CarMax's performance across key metrics indicates extremely weak operational performance and financial condition, leading to the conclusion that KMX is a very unattractive stock to buy [12][14]

Core Viewpoint - CarMax reported strong first-quarter earnings, exceeding analyst expectations, which led RBC Capital to maintain an Outperform rating and raise the price target from $80 to $81 [1]. Financial Performance - CarMax's first-quarter earnings per share were $1.38, surpassing the consensus estimate of $1.21 [1]. - Quarterly sales reached $7.55 billion, exceeding the analyst consensus estimate of $7.47 billion [1]. - Retail used unit sales increased by 9.0%, while comparable store used unit sales grew by 8.1%, both outperforming expectations [2][3]. Operational Insights - The company experienced a sequential improvement in category demand and market share gains, with each month of the quarter showing positive results, particularly April [3]. - SG&A as a percentage of gross profit improved to 73.8%, a reduction of approximately 680 basis points, attributed to cost management efforts despite rising compensation costs [4]. - CarMax repurchased $200 million in shares during the quarter, a significant increase compared to previous trends [4][5]. Challenges and Risks - CAF income declined by 3.6% to $141.7 million, primarily due to increased loan loss provisions, reflecting seasonal sales patterns and credit quality concerns [6]. - The company anticipates net sales growth of 1.9% and 3.9% for 2025 and 2026, respectively, with adjusted EPS estimates of $3.88 and $4.52 [7].