CARG vs KMX: Which Is the Better Buy in 2026?
Last updated August 2026
Short answer
CARG and KMX are similarly sized, but CARG trades noticeably cheaper on forward earnings (12.64x vs 18.67x): the market is paying up for KMX's profile and pricing CARG more conservatively, or for faster growth. Which you prefer comes down to the drivers you believe, and whether adding either over-concentrates what you already own.
CARG vs KMX: the tie-breaker metrics
Same yardstick, side by side (as of August 2026). Valuation lined up like this is most meaningful for two names in the same corner of the market, which these are. Figures are approximate; verify before investing.
| Metric | CARG | KMX | What it tells you |
|---|---|---|---|
| Forward P/E | 12.64 | 18.67 | Valuation on next year's expected earnings, the same yardstick for both. Lower is cheaper for that growth; higher means the market is paying up. |
| Trailing P/E | 19.38 | 35.57 | Valuation on the last 12 months. A big drop from trailing to forward means the market expects earnings to jump, so more growth is already in the price. |
| Beta | 1.17 | 1.16 | Volatility vs the market. Above 1 swings harder than the index; below 1 is steadier. Higher beta means bigger drawdowns to hold through. |
| Price vs 52-week range | 76% of range | 84% of range | Where today's price sits between the 52-week low and high. Near the high is momentum with less margin of safety; near the low is out of favor or a discount, depending on why. |
| Price / book | 14.25 | 1.33 | How much you pay over book value. Very high can signal an asset-light, high-return business or a rich price. |
Reading it: CARG is the cheaper of the two on forward earnings, but cheaper is not the same as better. Pair the valuation with growth (how far the forward P/E sits below the trailing P/E) and risk (beta) before you decide.
Before you buy: how CARG and KMX affect your concentration
The metrics above tell you which is the marginally better business. The bigger risk for most people is not picking the slightly worse stock, it is over-concentrating. CARG and KMX share themes, so owning both, or adding either to what you already hold, can quietly push a large share of your portfolio into one bet.
This is the part a generic comparison page cannot answer, because it depends on what you own. Connect your brokerage and Walnut shows your real, combined CARG and KMX exposure, flags overlap with your existing positions, and tells you if adding one would tip you past a concentration you are comfortable with, read-only by default, with your login staying at your broker. Walnut is not an investment adviser.
What does CarGurus (CARG) do?
CarGurus operates a search and comparison site for used and new vehicles, plus the Autolist marketplace in the US and PistonHeads in the UK. Shoppers use it free; franchise and independent dealers pay recurring subscriptions to list inventory and to buy higher placement, lead tools, and software such as PriceVantage for pricing and Digital Deal for starting a purchase online. Advertising from manufacturers and revenue-share from financing partners fill out the rest. Founded in 2005 in Boston by Langley Steinert and public since October 2017, it employs roughly ~1,200 people under CEO Jason Trevisan.
What does CarMax (KMX) do?
CarMax, Inc. operates the largest used-vehicle retail business in the United States, selling used cars and light trucks through a network of physical stores paired with an omnichannel platform that lets customers browse, finance, and buy online, in store, or in a mix of both. The company makes money three ways: gross profit on retail used-vehicle sales, wholesale profit from selling trade-ins and auction vehicles it does not retail, and financing income through CarMax Auto Finance (CAF), its captive lender. Its no-haggle pricing model and scale in sourcing and reconditioning have long been its structural advantages in a highly fragmented market dominated by small independent dealers.
CARG vs KMX: how do they differ?
Both fit overlapping themes, but they are not interchangeable. The useful comparison is which set of drivers and risks you want exposure to.
- CARG drivers: Dealer monetization per rooftop; A cleaner, single-segment business.
- KMX drivers: Used-vehicle demand and affordability; Omnichannel and market-share gains.
Which fits which kind of investor
A faster-growing, richer-valued name usually swings harder, so it suits a longer horizon and a higher tolerance for volatility; a steadier, more cash-generative business suits a more conservative or income-minded investor. The honest test is which set of risks you could hold through a drawdown: Auto retail is cyclical, and dealer advertising budgets shrink quickly when inventory turns slowly or affordability tightens, which puts CarGurus at the mercy of a market it does not control. For KMX, carMax is highly cyclical and sensitive to consumer spending, so a weak economy or job market can quickly cut used-car demand.
CARG or KMX: which should you pick?
CARG vs KMX: the full fundamentals
CARG. Trailing earnings are flattered by the exit from wholesale, so the gap between a ~27x trailing multiple and a ~13.5x forward multiple mostly reflects a cleaner ongoing business plus a shrinking share count. Cash generation runs ahead of reported profit, with ~$315M of free cash flow against ~$122M of cash and ~$185M of total debt. On sales the stock trades near ~3.4x, which is well below typical software marketplaces and above what a cyclical auto-retail name usually fetches.
KMX. CarMax's most recent quarter (ended May 2026) showed revenue of about $8.0 billion, up roughly 6% year over year, with EPS around $1.31, aided by higher average selling prices and wholesale volume even as comparable-store used-unit sales were roughly flat to slightly down. The market cap of about $7.3 billion is well below its pandemic-era peak, and the trailing P/E has ranged from the mid-20s to low-30s, above its longer-run historical average. All figures are approximate and as of JULY 2026.
Headline figures (approximate, August 2026): CARG shows revenue (ttm) ~$970M, net income (ttm) ~$180M, free cash flow (ttm) ~$315M, market cap ~$3.35B; KMX shows revenue (annual) ~$26B, recent quarter revenue (ended may 2026) ~$8.0B, recent quarter revenue growth (yoy) ~+6%, recent quarter eps ~$1.31.
The bottom line: CARG vs KMX
CARG and KMX are related but distinct: same themes, different businesses and risks. Neither wins in the abstract; the right pick is whichever thesis you actually believe, sized so you are not over-concentrated in one theme. Walnut can show your combined CARG and KMX exposure against your real portfolio. It is not an investment adviser.
Wondering how CARG or KMX fits the portfolio you already own? Walnut is an AI investing app that connects your brokerage read-only and answers questions like that about your actual holdings: overlap, concentration, and how each position tracks the S&P 500. Compare the best AI portfolio analyzers or see the best AI investing apps in 2026.
Investing in CarGurus with AI
Connect the broker you already use and ask Walnut's AI how CARG fits what you actually hold: whether you own it already through a fund, what it would do to your concentration, and how it has tracked the S&P 500. Read-only by default, and you approve anything before it reaches your broker.
FAQ
What is the difference between CARG and KMX?
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CarGurus operates a search and comparison site for used and new vehicles, plus the Autolist marketplace in the US and PistonHeads in the UK. CarMax, Inc. They show up together because they share investment themes, but they are different businesses, so the better fit depends on which thesis you are expressing.
Is CARG or KMX the better stock?
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Neither is universally better; they suit different views and risk levels. Walnut is informational, not investment advice. Compare what each does, the tie-breaker metrics above, and the risks, then decide which fits your thesis and what you already own.
Which is cheaper, CARG or KMX?
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On forward P/E (as of August 2026), CARG trades at 12.64x and KMX at 18.67x, so CARG is the cheaper of the two on next year's expected earnings. A lower multiple is not automatically the better buy: a richer valuation can be justified by faster growth, and a lower one can reflect real risk. Weigh the multiple against how fast each business is compounding.
Should you own both CARG and KMX?
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Because they share themes, owning both concentrates you in that theme. That can be intentional (a focused bet) or accidental (less diversification than it looks). Walnut can show your combined exposure across both, and whether adding either over-concentrates you, before you buy.
What are the risks of CARG vs KMX?
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CARG: Auto retail is cyclical, and dealer advertising budgets shrink quickly when inventory turns slowly or affordability tightens, which puts CarGurus at the mercy of a market it does not control. Competition for shopper attention is intense and expensive, with Cars.com, Autotrader, CarMax, Carvana, and increasingly Google and social platforms all bidding for the same searches. Legal exposure is real and current: after a data breach disclosed in early 2026, consumer class actions were filed on February 26, 2026 in the US District Court for the District of Massachusetts, including Ramirez v. CarGurus, Inc., No. 1:26-cv-11003, and Infield v. CarGurus, Inc., No. 1:26-cv-10996, alleging inadequate safeguards over personal and finance-application data for well over a million users; both remain at an early stage with no class certified. These are consumer privacy claims rather than securities-fraud claims, but they carry potential remediation cost, regulatory attention, and reputational drag on a business that asks shoppers to submit financing information. Finally, the CarOffer wind-down is a reminder that management's prior large capital-allocation bet did not work, and slowing marketplace growth would leave little to offset a multiple compression. KMX: CarMax is highly cyclical and sensitive to consumer spending, so a weak economy or job market can quickly cut used-car demand. Elevated vehicle prices and interest rates have pressured affordability and comparable-store sales, and average used selling prices have been volatile. The CAF finance arm adds credit risk if loan losses rise in a downturn. Competition is intense from online players like Carvana and from franchise-dealer groups such as AutoNation and Lithia Motors. The stock has also been volatile, with the market cap having swung sharply, and valuation multiples have at times looked rich relative to the company's own history.
Walnut is informational, not investment advice. This page is descriptive and not a recommendation to buy or sell CARG or KMX; figures are approximate and dated (as of August 2026). Verify current data before investing.