Why CarMax's Shares Popped

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What: Shares of auto retailer CarMax (NYSE: KMX  ) jumped as much as 13% today on a positive analyst report.

So what: ITG Research said that retail revenue growth is greater than expected and could set the company up to beat expectations. The company's tracking says that retail revenue growth is 16.7% versus an expectation of 13.3%.

Now what: ITG's numbers may turn out to be true but I would rather see strong data from the company before buying on a projection like this. Shares are trading at 16 times forward earnings, so if revenue is growing faster than expected then there could be a nice upside, but I'll wait to hear from management. Shares have lost some of their early gains, and like many analyst-induced pops I don't think today's will last.

Interested in more info on CarMax? Add it to your watchlist by clicking here.

Fool contributor Travis Hoium does not have a position in any company mentioned. You can follow Travis on Twitter at @FlushDrawFool, check out his personal stock holdings or follow his CAPS picks at TMFFlushDraw.

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Travis Hoium

Travis Hoium has been writing for since July 2010 and covers the solar industry, renewable energy, and gaming stocks among other things.

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5/24/2016 1:58 PM
KMX $52.96 Up +0.83 +1.59%
CarMax CAPS Rating: *****