CarMax (KMX) AI Stock Analysis

• Market Cap: $10.19B
• Dividend Yield: N/A
• Average Volume (3M): 4.00M
• Price to Earnings (P/E): 20.8
• Beta (1Y): 0.86
• Revenue Growth: -0.69%
• EPS Growth: 6.27%
• Country: US
• Employees: 30,048
• Sector: Consumer Cyclical
• Sector Strength: 59
• Industry: Auto - Dealerships
• EPS (TTM): 3.20
• Shares Outstanding: 152,684,220
• 10 Day Avg. Volume: 2,809,544
• 30 Day Avg. Volume: 4,004,518
• PEG Ratio: 3.32
• Price to Book (P/B): N/A
• Price to Sales (P/S): 0.00
• Price to Cash Flow (P/CF): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.09
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: 10.85
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: $82.83
• Price Target Upside: 24.16% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 14

CarMax's stock score reflects a blend of positive sentiment from strong earnings and strategic initiatives against a backdrop of financial challenges and bearish technical indicators. The balance sheet strength and strategic digital focus provide a foundation for potential growth, but revenue declines and profitability pressures remain key risks.

Positive Factors

Financial Performance

Total revenue and gross profit came in stronger than expected.

Market Share Expansion

CarMax aims to consistently gain market share while reducing the SG&A-to-gross-profit ratio, potentially boosting earnings per share at current sales levels.

Omnichannel Strategy

CarMax's investment in a seamless omnichannel customer experience is expected to widen the customer funnel and improve labor efficiencies and sourcing advantages.

Negative Factors

Competitive Pressures

Competitive pressures are increasing from franchised dealers and Carvana.

Profitability Challenges

Despite significant changes, the fruits from these actions haven’t yet resulted in improved profitability, with EBITDA/unit still tracking well below FY20 levels.

SG&A Expenses

The stock price traded down on results partially due to higher than expected SG&A as a percentage of Gross Profit.

CarMax Business Overview & Revenue Model

Company Description

CarMax, Inc., together with its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates through two segments, CarMax Sales Operations and CarMax Auto Finance. It offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; and extended protection plans to customers at the time of sale, as well as sells vehicles that are approximately 10 years old and has more than 100,000 miles through wholesale auctions. The company also provides reconditioning and vehicle repair services; and financing alternatives for retail customers across a range of credit spectrum through its CarMax Auto Finance and arrangements with various financial institutions. As of February 28, 2022, it operated approximately 230 used car stores. CarMax, Inc. was founded in 1993 and is based in Richmond, Virginia.

How the Company Makes Money

CarMax generates revenue primarily through the sale of used vehicles. The company purchases vehicles from auctions, customers, and other sources, which are then reconditioned and sold at a markup. CarMax also earns money from selling extended service plans and financing products, either through its own CarMax Auto Finance division or third-party financial institutions. The company's revenue model is further supported by its online sales platform, which allows customers to browse and purchase vehicles online, sometimes complemented by in-store visits. The combination of retail vehicle sales, financing, and service plans constitutes the core revenue streams for CarMax.

CarMax Financial Statement Overview

Summary

CarMax's overall financial performance shows resilience with a strong balance sheet and improving cash flow, but faces challenges with declining revenue and profitability.

Income Statement

CarMax's income statement reveals a volatile revenue trend with recent revenue declines from $31.9 billion in 2022 to $26.4 billion in 2025. The Gross Profit Margin in 2025 is approximately 11%, slightly improving from previous years, indicating efficient cost management amidst revenue fluctuations. However, the Net Profit Margin has diminished, reflecting reduced profitability, as evidenced by a decline in EBIT and EBITDA margins from 2022 to 2025.

Balance Sheet

CarMax's balance sheet shows a strong equity position, with Stockholders' Equity rising to $6.1 billion in 2024, despite fluctuations in Total Assets and Total Liabilities. The Debt-to-Equity Ratio decreased significantly from 2022 to 2025, demonstrating improved leverage and financial stability. The Equity Ratio remains solid at over 20%, underscoring a resilient capital structure.

Cash Flow

The cash flow statement highlights a significant turnaround with Free Cash Flow improving to $156.5 million in 2025 from a negative position in previous years. Operating Cash Flow has also rebounded, yet the Operating Cash Flow to Net Income Ratio indicates challenges in translating income into cash. Free Cash Flow variations suggest potential risks in cash management.

Breakdown
Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement		Total Revenue
26.35B	26.54B	29.68B	31.90B	18.95B
	Gross Profit
2.90B	2.71B	2.80B	3.29B	2.38B
	EBIT
462.50M	942.20M	1.07B	1.82B	1.05B
	EBITDA
1.03B	1.04B	1.02B	1.83B	1.29B
	Net Income Common Stockholders
500.56M	479.20M	484.76M	1.15B	746.92M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
246.96M	574.14M	314.76M	102.72M	132.32M
	Total Assets
27.40B	27.20B	26.18B	26.34B	21.54B
	Total Debt
19.22B	19.53B	18.93B	19.27B	15.53B
	Net Debt
18.98B	18.74B	18.62B	19.17B	15.39B
	Total Liabilities
21.16B	21.12B	20.57B	21.10B	17.18B
	Stockholders Equity
6.24B	6.07B	5.61B	5.24B	4.36B
Cash Flow		Free Cash Flow
156.50M	-6.69M	860.62M	-2.86B	503.22M
	Operating Cash Flow
624.44M	458.62M	1.28B	-2.55B	667.76M
	Investing Cash Flow
-461.00M	-467.00M	-425.77M	-523.75M	-128.18M
	Financing Cash Flow
-453.54M	307.79M	-710.18M	3.10B	-424.02M

CarMax Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 66.71
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMX, the sentiment is Negative. The current price of 66.71 is below the 20-day moving average (MA) of 67.62, below the 50-day MA of 73.01, and below the 200-day MA of 78.25, indicating a bearish trend. The MACD of -2.53 indicates Negative momentum. The RSI at 44.65 is Neutral, neither overbought nor oversold. The STOCH value of 57.12 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KMX.

CarMax Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	77 Outperform	$10.41B	11.45	18.57%	2.82%	3.29%	-1.30%
AN	74 Outperform	$6.49B	9.75	28.45%	―	-0.24%	-19.76%
ABG	74 Outperform	$4.37B	10.58	11.92%	―	11.11%	-23.41%
LAD	73 Outperform	$7.72B	9.34	12.95%	0.71%	12.96%	-6.25%
GPI	73 Outperform	$5.33B	11.61	16.25%	0.46%	15.13%	-15.91%
Sector *	61 Neutral	$6.65B	11.71	3.09%	3.98%	2.65%	-20.82%
KMX	61 Neutral	$10.19B	20.82	8.13%	―	-0.69%	6.27%

CarMax Corporate Events

CarMax Board Changes: Director Departure and Bylaws Amendment

On January 28, 2025, CarMax board member Ronald E. Blaylock announced he would not seek reelection at the company’s 2025 annual meeting, a decision unrelated to any disagreement with the company. Additionally, the CarMax Board amended the company’s bylaws to allow shareholders owning at least 20% of common stock to call special meetings, potentially increasing shareholder influence in company decisions.