KMX KMX

The price pays for

• 1. A sharp reversal from the recent -1.8% revenue decline to a sustained +7.0% annual growth rate, which the reverse-DCF shows is required at the current price.
• 2. The Q1 earnings beat and the strategy of cutting used-car prices and expanding subprime lending to defend volume, which circulated widely and the price accepted.
• 3. The continuation of the $8 billion annual auto loan origination pace, which supports unit sales even if vehicle margins compress.
• 4. Insider confidence from the four directors who purchased shares following the Q1 report, which the market treated as validation.

It declines to pay for