KMX vs LAD

For growth investors, Lithia Motors, Inc.

(LAD) is the stronger pick with 4. 0% revenue growth year-over-year, versus -0. 0% for CarMax, Inc. (KMX). Lithia Motors, Inc. (LAD) offers the better valuation at 9. 0x trailing P/E (8. 4x forward), making it the more compelling value choice. Analysts rate Lithia Motors, Inc. (LAD) a "Buy" — based on 26 analyst ratings — the highest consensus in this comparison. The "better buy" depends entirely on your goals: growth investors should weight revenue trajectory, value investors should weight P/E and PEG, and income investors should weight dividend yield and streak.

On trailing P/E, Lithia Motors, Inc.

(LAD) is the cheapest at 9. 0x versus CarMax, Inc. at 12. 3x. On forward P/E, Lithia Motors, Inc. is actually cheaper at 8. 4x.

Over the past 5 years, Lithia Motors, Inc.

(LAD) delivered a total return of -21. 4%, compared to -69. 7% for CarMax, Inc. (KMX). Over 10 years, the gap is even starker: LAD returned +265. 4% versus KMX's -21. 8%. Past returns do not guarantee future results, and the stock with the higher historical return may already have its best growth priced in.

By beta (market sensitivity over 5 years), Lithia Motors, Inc.

(LAD) is the lower-risk stock at 1. 09β versus CarMax, Inc. 's 1. 32β — meaning KMX is approximately 21% more volatile than LAD relative to the S&P 500. On balance sheet safety, Lithia Motors, Inc. (LAD) carries a lower debt/equity ratio of 2% versus 3% for CarMax, Inc. — giving it more financial flexibility in a downturn.

By revenue growth (latest reported year), Lithia Motors, Inc.

(LAD) is pulling ahead at 4. 0% versus -0. 0% for CarMax, Inc. (KMX). On earnings-per-share growth, the picture is similar: Lithia Motors, Inc. grew EPS 9. 0% year-over-year, compared to 6. 3% for CarMax, Inc.. Over a 3-year CAGR, LAD leads at 10. 1% annualised revenue growth. Higher growth typically commands a higher valuation multiple — check whether the premium P/E or P/S is justified by the growth rate using the PEG ratio.

Lithia Motors, Inc.

(LAD) is the more profitable company, earning 2. 2% net margin versus 1. 8% for CarMax, Inc. — meaning it keeps 2. 2% of every revenue dollar as bottom-line profit. Operating margin tells a similar story: LAD leads at 3. 8% versus 2. 8% for KMX. At the gross margin level — before operating expenses — LAD leads at 15. 2%, reflecting greater pricing power or product mix advantage. Stronger margins indicate durable pricing power, lower cost of revenue, or higher mix of software/services. They are one of the clearest signs of business quality.

On forward earnings alone, Lithia Motors, Inc.

(LAD) trades at 8. 4x forward P/E versus 14. 6x for CarMax, Inc. — 6. 2x cheaper on a one-year earnings basis. Analyst consensus price targets imply the most upside for LAD: 42. 2% to $411. 67.

In this comparison, LAD (0.

8% yield) pays a dividend. KMX does not pay a meaningful dividend and should not be held primarily for income.

For long-horizon retirement investors, Lithia Motors, Inc.

(LAD) is the stronger choice — it scores higher on the combination of lower volatility, dividend reliability, and long-term compounding (low volatility (β 1. 09), 0. 8% yield, +265. 4% 10Y return). Both have compounded well over 10 years (LAD: +265. 4%, KMX: -21. 8%), confirming both are viable long-term holds — but the lower-volatility option typically results in less emotional selling during corrections. Retirement portfolios generally favour predictability over maximum returns. Consult a financial advisor before making allocation decisions.

Both stocks operate in the Consumer Cyclical sector, making this a peer-level intra-sector comparison — the same macro tailwinds and headwinds will affect both.

LAD pays a dividend while KMX does not, making them suitable for different income and tax situations. These fundamental differences mean investors should not choose between them on a single metric — the "better stock" depends entirely on which of these characteristics aligns with your investment strategy.