Contrasting CarMax (NYSE:KMX) and Genuine Parts (NYSE:GPC)

CarMax (NYSE:KMX) and Genuine Parts (NYSE:GPC) are both large-cap retail/wholesale companies, but which is the superior investment? We will compare the two companies based on the strength of their dividends, valuation, institutional ownership, risk, profitability, earnings and analyst recommendations.

Analyst Ratings

This is a breakdown of recent recommendations for CarMax and Genuine Parts, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
CarMax	3	3	6	1	2.38
Genuine Parts	1	4	3	2	2.60

CarMax presently has a consensus target price of $86.40, indicating a potential upside of 25.84%. Genuine Parts has a consensus target price of $130.86, indicating a potential upside of 9.39%. Given CarMax’s higher possible upside, equities research analysts clearly believe CarMax is more favorable than Genuine Parts.

Earnings and Valuation

This table compares CarMax and Genuine Parts”s revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
CarMax	$26.35 billion	0.40	$500.56 million	$3.21	21.39
Genuine Parts	$23.49 billion	0.71	$904.08 million	$6.09	19.64

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

Risk and Volatility

CarMax has a beta of 1.38, indicating that its share price is 38% more volatile than the S&P 500. Comparatively, Genuine Parts has a beta of 0.76, indicating that its share price is 24% less volatile than the S&P 500.

Institutional & Insider Ownership

78.8% of Genuine Parts shares are held by institutional investors. 1.7% of CarMax shares are held by insiders. Comparatively, 0.4% of Genuine Parts shares are held by insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a company is poised for long-term growth.

Profitability

This table compares CarMax and Genuine Parts’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
CarMax	1.90%	8.22%	1.87%
Genuine Parts	3.60%	23.71%	5.48%

Summary

Genuine Parts beats CarMax on 10 of the 15 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 Genuine Parts

Genuine Parts Company distributes automotive replacement parts, and industrial parts and materials. It operates in two segments: Automotive Parts Group and Industrial Parts Group segments. The company distributes automotive replacement parts for hybrid and electric vehicles, trucks, SUVs, buses, motorcycles, recreational vehicles, farm vehicles, small engines, farm equipment, marine equipment, and heavy duty equipment; and equipment and parts used by repair shops, service stations, fleet operators, automobile and truck dealers, leasing companies, bus and truck lines, mass merchandisers, farms, and individuals. It also distributes industrial replacement parts and related supplies, such as abrasives, adhesives, sealants and tape, bearings, chemicals, cutting tools, electrical, facility maintenance, hose and fittings, hydraulics, janitorial, mechanical power transmission, pneumatics, process pumps and equipment, safety, seals and gaskets, and tools and testing instruments, as well as maintenance, repair, and operation customers in aggregate and cement, automotive, chemical and allied products, equipment and machinery, equipment rental and leasing, fabricated metals, food and beverage, iron and steel, lumber and wood, oil and gas, pulp and paper, and rubber products. In addition, the company provides various services and repairs comprising gearbox and fluid power and process pump assembly and repair, hydraulic drive shaft repair, electrical panel assembly and repair, hose and gasket manufacture and assembly. It operates in the United States, Canada, France, the United Kingdom, Ireland, Germany, Poland, the Netherlands, Belgium, Spain, Portugal, Australia, New Zealand, Mexico, Indonesia, and Singapore. The company was incorporated in 1928 and is headquartered in Atlanta, Georgia.