Is CarMax, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for CarMax, Inc. has moved from very attractive to fair, indicating a shift in its perceived value. The company appears to be overvalued based on its current metrics, with a P/E ratio of 20, a Price to Book Value of 1.60, and an EV to EBITDA ratio of 167.14, which significantly exceeds the industry norms. In comparison, Penske Automotive Group, Inc. is considered attractive with a P/E of 12.91 and an EV to EBITDA of 14.17, highlighting the relative overvaluation of CarMax.
The stock has underperformed against the S&P 500, with a year-to-date return of -47.53% compared to the S&P 500's 13.30%. This trend is further emphasized by a 5-year return of -54.24% for CarMax, while the S&P 500 has gained 91.29% during the same period, reinforcing the notion that CarMax is currently overvalued in the market.