CarMax Faces Revenue Decline Amid Challenging Sales Environment, Holds Rating Despite EPS Drop

William Blair analyst Sharon Zackfia has maintained their neutral stance on KMX stock, giving a Hold rating today.

Sharon Zackfia’s rating is based on several key observations regarding CarMax’s financial performance and market conditions. The company is anticipated to experience an 8.5% to 9.0% decline in used unit sales for the third quarter, which, although slightly better than previously expected, still indicates a challenging sales environment. This decline is also accompanied by a projected 12% drop in wholesale revenue, contributing to an overall revenue decrease of approximately 9%.
Despite these challenges, the expected earnings per share (EPS) for the third quarter is projected to be $0.41, which is within the preannounced range but reflects a significant 50% reduction from previous levels. The anticipated expenses related to leadership changes and workforce reductions further impact the financial outlook. These factors combined suggest a cautious approach, leading to the Hold rating as the company navigates these headwinds.

According to TipRanks, Zackfia is a 4-star analyst with an average return of 5.6% and a 45.36% success rate. Zackfia covers the Consumer Cyclical sector, focusing on stocks such as CarMax, Planet Fitness, and Carnival.

In another report released today, Evercore ISI also maintained a Hold rating on the stock with a $37.00 price target.