CarMax (KMX) AI Stock Analysis

• Market Cap: $8.86B
• Dividend Yield: N/A
• Average Volume (3M): 3.53M
• Price to Earnings (P/E): 16.0
• Beta (1Y): 0.90
• Revenue Growth: 3.17%
• EPS Growth: 42.14%
• Country: US
• Employees: 30,048
• Sector: Consumer Cyclical
• Sector Strength: 66
• Industry: Auto - Dealerships
• EPS (TTM): 1.38
• Shares Outstanding: 150,072,160
• 10 Day Avg. Volume: 2,842,874
• 30 Day Avg. Volume: 3,532,119
• PEG Ratio: 1.29
• Price to Book (P/B): 1.47
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 16.85
• Enterprise Value/Market Cap: 3.02
• Enterprise Value/Revenue: 0.44
• Enterprise Value/Gross Profit: 13.47
• Enterprise Value/Ebitda: 5.65
• 1Y Price Target: $77.70
• Price Target Upside: 37.25% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 11

• Rating: 65 Neutral
• Price Target: $65.00 ▲(14.82%Upside)

CarMax's strong earnings performance and strategic initiatives are key strengths, despite technical analysis indicating bearish momentum and challenges with revenue growth and margins. The stable financial position and reasonable valuation support a moderate overall score.

Positive Factors

Financial Performance

Strong financial results, including record retail gross profit per unit and significant growth in earnings per share, highlight CarMax's operational efficiency and margin resilience.

Market Strategy

CarMax's strategy to continue retail volume growth via expanded reconditioning capacity and more profitable sourcing channels is well-positioned for future success.

Strategic Positioning

CarMax's investments in digital tools and AI are driving efficiency and SG&A leverage.

Negative Factors

Growth Sustainability

Investors remain uncertain around CarMax's ability to sustain this level of growth with moderating economic activity and policy uncertainty.

Investor Confidence

Investors are waiting on the sidelines for incremental conviction in management's ability to execute on volume growth and provide greater disclosure in progress towards those goals.

Strategy Execution

The strategy shift was difficult to track without reported metrics around sales or share by age cohort.

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 makes money primarily through the sale of used vehicles. The company purchases vehicles from consumers, auctions, and dealerships, and then resells them at a profit. In addition to vehicle sales, CarMax generates revenue through financing, where it facilitates loans for customers buying vehicles. The company partners with third-party financial institutions to offer financing options, earning a commission or fee for each loan arranged. Additionally, CarMax offers extended service plans and vehicle protection products, contributing to its revenue streams. The company's earnings are also supported by its vehicle appraisal and purchasing services, which attract customers looking to sell their cars directly to CarMax.

CarMax Financial Statement Overview

Summary

CarMax is maintaining profitability and cash flow generation despite revenue growth challenges and declining margins. The balance sheet shows a reliance on debt, but this is balanced by effective cash management and shareholder returns.

Income Statement

CarMax shows reasonable profitability with a gross profit margin of approximately 11.2% and a net profit margin of 2.1% in TTM. However, the company is experiencing a decrease in revenue growth, with a drop of about 15.7% over the past two years. EBIT and EBITDA margins have also declined, indicating pressures on operational efficiency.

Balance Sheet

The balance sheet reflects a moderately leveraged position with a debt-to-equity ratio of about 2.85. The return on equity (ROE) is fairly stable at 8.9% for TTM, suggesting that the company is generating returns for shareholders. However, equity ratio stands at 22.9%, indicating a reliance on debt financing.

Cash Flow

CarMax demonstrates strong cash flow management with a significant improvement in free cash flow, growing by over 245% in the latest year. The operating cash flow to net income ratio is healthy at 1.87, suggesting effective cash generation relative to net earnings. The free cash flow to net income ratio is also favorable at 0.97.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 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
EBITDA	1.03B	1.04B	1.02B	2.09B	1.29B
Net Income	500.56M	479.20M	484.76M	1.15B	746.92M
Balance Sheet
Total Assets	27.40B	27.20B	26.18B	26.34B	21.54B
Cash, Cash Equivalents and Short-Term Investments	246.96M	574.14M	314.76M	102.72M	132.32M
Total Debt	19.22B	19.53B	18.93B	19.27B	15.53B
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: 56.61
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

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 56.61 is below the 20-day moving average (MA) of 63.22, below the 50-day MA of 64.90, and below the 200-day MA of 74.13, indicating a bearish trend. The MACD of -2.23 indicates Positive momentum. The RSI at 28.82 is Positive, neither overbought nor oversold. The STOCH value of 4.42 is Positive, 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
GPI	78 Outperform	$5.33B	11.42	15.72%	0.47%	19.75%	-10.74%
ABG	74 Outperform	$4.37B	8.11	15.19%	―	8.39%	40.35%
PAG	71 Outperform	$11.12B	11.70	18.08%	2.83%	2.39%	5.83%
LAD	70 Outperform	$7.38B	8.53	13.34%	0.74%	10.25%	9.08%
AN	69 Neutral	$7.29B	12.05	27.24%	―	3.15%	-12.49%
Sector *	67 Neutral	¥261.79B	13.64	6.45%	2.57%	5.11%	-13.15%
KMX	65 Neutral	$8.86B	16.04	8.97%	―	3.17%	42.14%

CarMax Corporate Events

CarMax Shareholders Meeting Concludes with Key Decisions

On June 24, 2025, CarMax held its 2025 Annual Meeting of Shareholders, where several key decisions were made. The shareholders elected directors to the Board for a one-year term, ratified KPMG LLP as the independent registered public accounting firm for fiscal year 2026, and approved a non-binding advisory resolution on executive compensation. However, a shareholder proposal regarding a special meeting right was not approved.

The most recent analyst rating on (KMX) stock is a Sell with a $58.00 price target. To see the full list of analyst forecasts on CarMax stock, see the KMX Stock Forecast page.

CarMax Announces Departure of Key Executive Officer

On May 9, 2025, CarMax, Inc. announced the departure of James Lyski, its Executive Vice President and Chief Growth and Strategy Officer, effective June 8, 2025. This change in leadership could impact the company’s strategic direction and growth initiatives, as Lyski was a key figure in these areas.

The most recent analyst rating on (KMX) stock is a Sell with a $50.00 price target. To see the full list of analyst forecasts on CarMax stock, see the KMX Stock Forecast page.