KAR gets a fundamental rating of 5 out of 10. The analysis compared the fundamentals against 80 industry peers in the Commercial Services & Supplies industry. KAR has only an average score on both its financial health and profitability. KAR has a decent growth rate and is not valued too expensively.

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1. Profitability

2. Health

3. Growth

4. Valuation

5. Dividend

1. Profitability

1.1 Basic Checks

KAR had positive earnings in the past year.
KAR had a positive operating cash flow in the past year.
The reported net income has been mixed in the past 5 years: KAR reported negative net income in multiple years.
Of the past 5 years KAR 4 years had a positive operating cash flow.

1.2 Ratios

Looking at the Return On Assets, with a value of 2.30%, KAR is in line with its industry, outperforming 58.02% of the companies in the same industry.
Looking at the Return On Equity, with a value of 5.44%, KAR is in line with its industry, outperforming 55.56% of the companies in the same industry.
KAR has a Return On Invested Capital of 10.39%. This is in the better half of the industry: KAR outperforms 75.31% of its industry peers.
KAR had an Average Return On Invested Capital over the past 3 years of 6.94%. This is below the industry average of 10.58%.
The 3 year average ROIC (6.94%) for KAR is below the current ROIC(10.39%), indicating increased profibility in the last year.

		Industry Rank	Sector Rank
ROA	2.3%
ROE	5.44%
ROIC	10.39%

ROA(3y)0.38%

ROA(5y)0.26%

ROE(3y)0.85%

ROE(5y)0.64%

ROIC(3y)6.94%

ROIC(5y)5.07%

1.3 Margins

Looking at the Profit Margin, with a value of 5.74%, KAR is in the better half of the industry, outperforming 69.14% of the companies in the same industry.
In the last couple of years the Profit Margin of KAR has declined.
KAR has a better Operating Margin (16.53%) than 86.42% of its industry peers.
In the last couple of years the Operating Margin of KAR has grown nicely.
The Gross Margin of KAR (47.69%) is better than 87.65% of its industry peers.
In the last couple of years the Gross Margin of KAR has grown nicely.

		Industry Rank	Sector Rank
OM	16.53%
PM (TTM)	5.74%
GM	47.69%

OM growth 3Y20.36%

OM growth 5Y6.3%

PM growth 3Y15.59%

PM growth 5Y-11.58%

GM growth 3Y0.85%

GM growth 5Y2.13%

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ROA

ROE

ROIC

Operating and Profit Margin

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2. Health

2.1 Basic Checks

KAR has a Return on Invested Capital (ROIC), which is below the Cost of Capital (WACC), which means it is destroying value.
Compared to 1 year ago, KAR has less shares outstanding
Compared to 5 years ago, KAR has less shares outstanding
The debt/assets ratio for KAR has been reduced compared to a year ago.

2.2 Solvency

KAR has an Altman-Z score of 1.66. This is a bad value and indicates that KAR is not financially healthy and even has some risk of bankruptcy.
KAR has a Altman-Z score of 1.66. This is comparable to the rest of the industry: KAR outperforms 41.98% of its industry peers.
KAR has no outstanding debt. Therefor its Debt/Equity and Debt/FCF ratios are 0 and belong to the best of the industry.

		Industry Rank	Sector Rank
Debt/Equity	0
Debt/FCF	0.06
Altman-Z	1.66

ROIC/WACC0.96

WACC10.85%

2.3 Liquidity

KAR has a Current Ratio of 1.16. This is a normal value and indicates that KAR is financially healthy and should not expect problems in meeting its short term obligations.
The Current ratio of KAR (1.16) is worse than 67.90% of its industry peers.
A Quick Ratio of 1.16 indicates that KAR should not have too much problems paying its short term obligations.
The Quick ratio of KAR (1.16) is comparable to the rest of the industry.

		Industry Rank	Sector Rank
Current Ratio	1.16
Quick Ratio	1.16

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WACC

Debt/Equity

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Altman-Z score

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3. Growth

3.1 Past

The Earnings Per Share has grown by an impressive 50.00% over the past year.
The earnings per share for KAR have been decreasing by -11.77% on average. This is quite bad
Looking at the last year, KAR shows a quite strong growth in Revenue. The Revenue has grown by 14.48% in the last year.
KAR shows a decrease in Revenue. Measured over the last years, the Revenue has been decreasing by -8.46% yearly.

EPS 1Y (TTM)50%

EPS 3Y13.59%

EPS 5Y-11.77%

EPS Q2Q%34.62%

Revenue 1Y (TTM)14.48%

Revenue growth 3Y7.23%

Revenue growth 5Y-8.46%

Sales Q2Q%11.15%

3.2 Future

The Earnings Per Share is expected to grow by 30.72% on average over the next years. This is a very strong growth
The Revenue is expected to grow by 7.92% on average over the next years.

EPS Next Y48.37%

EPS Next 2Y30.28%

EPS Next 3Y30.72%

EPS Next 5YN/A

Revenue Next Year11.2%

Revenue Next 2Y8.1%

Revenue Next 3Y7.92%

Revenue Next 5YN/A

3.3 Evolution

The EPS growth rate is accelerating: in the next years the growth will be better than in the last years.
When comparing the Revenue growth rate of the last years to the growth rate of the upcoming years, we see that the growth is accelerating.

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4. Valuation

4.1 Price/Earnings Ratio

KAR is valuated quite expensively with a Price/Earnings ratio of 25.73.
KAR's Price/Earnings ratio is a bit cheaper when compared to the industry. KAR is cheaper than 60.49% of the companies in the same industry.
KAR's Price/Earnings ratio indicates a similar valuation than the S&P500 average which is at 27.25.
A Price/Forward Earnings ratio of 21.40 indicates a rather expensive valuation of KAR.
KAR's Price/Forward Earnings ratio is a bit cheaper when compared to the industry. KAR is cheaper than 66.67% of the companies in the same industry.
The average S&P500 Price/Forward Earnings ratio is at 25.98. KAR is around the same levels.

		Industry Rank	Sector Rank
PE	25.73
Fwd PE	21.4

4.2 Price Multiples

Based on the Enterprise Value to EBITDA ratio, KAR is valued a bit cheaper than 79.01% of the companies in the same industry.
Based on the Price/Free Cash Flow ratio, KAR is valued cheaply inside the industry as 82.72% of the companies are valued more expensively.

		Industry Rank	Sector Rank
P/FCF	13.43
EV/EBITDA	7.74

4.3 Compensation for Growth

The low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
KAR has a very decent profitability rating, which may justify a higher PE ratio.
A more expensive valuation may be justified as KAR's earnings are expected to grow with 30.72% in the coming years.