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  "documentTitle": "Carvana Co. (CVNA)",
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  "presentationDate": "2019-03-01 00:00:00",
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  "notes": "Uses a before-and-after comparison to show how removing captive finance income brings CarMax's metrics closer to the peer average.",
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      "text": "Comp KMX falls from 7.7% to 4.9%",
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      "text": "Adjusting KMX profitability for CAF income, Carvana's potential upside appears much more modest.",
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      "text": "Part of the driver behind management's envisioned GPU expansion is its insistence that CarMax is a good comparison case. All-in, CarMax generates GPU of $3,914 and EBITDA margins of 7.7% as of Q3 FY19, implying significantly higher upside to Carvana profitability than the industry average GPU of ~$3,230 and EBITDA margin of ~4%. However, 16% of its all-in GPU is driven by income from CarMax Auto Finance (CAF), CarMax's captive auto finance arm. As Carvana sells 100% of the loans that it originates, it wouldn't be appropriate to compare Carvana GPU or EBITDA to CarMax profitability measures which include the impact of CAF. Adjusting company-wide profit for CAF puts CarMax Q3 GPU at $3,281 and EBITDA margins at 4.9%, far more similar to the rest of the auto dealer universe. Carvana's upside should be measured against this standard, not against a standard which includes the impact of a business line in which it does not participate.",
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      "text": "Apples To Oranges: Carvana Management Wants To Have Its Cake And Eat It Too",
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