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CarMax
(NYSE:KMX)
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Rating:60Neutral
Price Target:
$55.00
▲(34.54% Upside)
Action:Reiterated
Date:06/25/26
Overall score reflects a mix of strong price momentum and improving operational signals versus still-middling fundamentals. The biggest supports are bullish technicals and management’s measurable cost/efficiency targets (SG&A savings, EPP margin initiatives, CAF penetration). The main offsets are thin and pressured retail margins, historically volatile earnings/cash flows, and a relatively high P/E that increases execution risk.
Positive Factors
Cash Generation
Consistent positive TTM operating and free cash flow provides durable internal funding to support inventory cycles, deleveraging and targeted investments. This improves financial flexibility across cycles and reduces dependence on external capital for SG&A and strategic initiatives.
Negative Factors
Thin Profitability
Very low net margins and historically volatile profitability leave limited cushion for shocks. Small adverse moves in used-vehicle prices, reconditioning costs or credit losses can quickly erode earnings, making durable profit recovery and return metrics uncertain.
Read all positive and negative factors
Positive Factors
Negative Factors
Cash Generation
Consistent positive TTM operating and free cash flow provides durable internal funding to support inventory cycles, deleveraging and targeted investments. This improves financial flexibility across cycles and reduces dependence on external capital for SG&A and strategic initiatives.
Read all positive factors
CarMax Key Performance Indicators (KPIs)
Any
Gross Profit by Segment
Highlights profitability across different segments, providing insight into which areas contribute most to the bottom line and where cost efficiencies or pricing power are strongest.
Highlights profitability across different segments, providing insight into which areas contribute most to the bottom line and where cost efficiencies or pricing power are strongest.
Data provided by:
The Fly
The FlyCarMax (KMX) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$7.13B
Dividend YieldN/A
Average Volume (3M)3.84M
Price to Earnings (P/E)31.7
Beta (1Y)0.74
Revenue Growth-1.69%
EPS Growth-58.01%
CountryUS
Employees30,048
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)1.61
Shares Outstanding141,911,100
10 Day Avg. Volume3,892,385
30 Day Avg. Volume3,836,510
Financial Highlights & Ratios
PEG Ratio-0.54
Price to Book (P/B)1.08
Price to Sales (P/S)0.25
P/FCF Ratio5.11
Enterprise Value/Market Cap3.48
Enterprise Value/Revenue0.94
Enterprise Value/Gross Profit9.18
Enterprise Value/Ebitda21.96
Forecast
1Y Price Target
$47.27Price Target Upside15.64% Upside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)2.66
Revenue Forecast (FY)$27.05B
CarMax Business Overview & Revenue Model
Company Description
CarMax, Inc., together with its associated entities, functions as a prominent purveyor of previously owned automobiles across the United States. Its business operations are strategically structured into two principal divisions: CarMax Sales Operat...
How the Company Makes Money
CarMax generates revenue primarily from (1) used vehicle sales and (2) associated financing and ancillary products. Used vehicle sales: CarMax buys used vehicles (including customer trade-ins, auctions, and other sourcing channels) and resells the...
CarMax Earnings Call Summary
Earnings Call Date:Jun 17, 2026
(Q1-2027)
| % Change Since: |
Next Earnings Date:Sep 29, 2026
Earnings Call Sentiment Neutral
The call presents a balanced picture: the company delivered revenue and unit growth, improved several operating trends (CAF penetration, NIM, SG&A per unit leverage), and laid out a clear four-pillar strategy with measurable targets (EPP incremental margin, $200M exit-rate savings). However, meaningful margin headwinds remain — total gross profit and used retail margins declined, EPS dipped, and reconditioning/operational improvements are still ramping. Management emphasized they are taking deliberate margin concessions to regain share while investing in efficiency to self-fund pricing competitiveness. Progress is evident, but key profit and operational initiatives must continue to mature.Positive Updates
Revenue Growth
Total sales of $8.0 billion, up 6.2% year-over-year, driven by more competitive pricing, stronger acquisition marketing, and initial progress on new strategic initiatives.
Negative Updates
Decline in Gross Profit and Used Retail Margin
Total gross profit was $854 million, down 4% year-over-year; used retail margin decreased 10% to $501 million, with profit per used unit falling to $2,177 (down $230 per unit versus prior year).
Read all updates
Q1-2027 Updates
Positive
Negative
Revenue Growth
Total sales of $8.0 billion, up 6.2% year-over-year, driven by more competitive pricing, stronger acquisition marketing, and initial progress on new strategic initiatives.
Read all positive updates
Company Guidance
Management reaffirmed a path to stronger FY‑2027 profitability and efficiency, saying they remain on track for exit‑rate SG&A savings (management cited an increased target toward $200 million from a prior $150–$200M range), will pursue more dynamic GPU management (Q1 GPU cuts were smaller than the prior ~$300/unit near‑term guidance while management referenced targeting roughly a ~$200/unit year‑over‑year GPU reduction for the year but with quarter‑to‑quarter flexibility), and expect to drive about $35 of incremental EPP margin per unit in FY‑2027 while continuing CAF full‑spectrum expansion toward a ~50% mid‑term penetration goal; supporting metrics from Q1 include total sales of $8.0B (+6.2% YoY) on ~392k vehicles sold (+3.3%), retail ASP $27,288 (+$1,168), EPS $1.31, total gross profit $854M (−4%), used retail margin $501M (−10%) and profit per used unit $2,177 (−$230), wholesale margin $169M (+8%) with avg wholesale price $8,364 (+$405), SG&A $635M (−4%) or $1,619 per unit (levered $118/unit, −7%), CAF originations $2.4B with 43.3% sales penetration (+150 bps), CAF income $140M, loan‑loss provision $96M, reserves $475M (2.95% of managed receivables) and a CAF net interest margin of 6.7% (+20 bps).CarMax Financial Statement Overview
Summary
Income Statement
52
Neutral
Balance Sheet
45
Neutral
Cash Flow
57
Neutral
| Breakdown | TTM | Feb 2026 | Feb 2025 | Feb 2024 | Feb 2023 | Feb 2022 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 26.35B | 25.88B | 26.35B | 26.54B | 29.68B | 31.90B |
| Gross Profit | 2.70B | 2.81B | 2.90B | 2.71B | 2.80B | 3.29B |
| EBITDA | 1.13B | 1.61B | 1.84B | 1.67B | 1.33B | 2.09B |
| Net Income | 222.54M | 247.29M | 500.56M | 479.20M | 484.76M | 1.15B |
Balance Sheet | ||||||
| Total Assets | 26.63B | 26.37B | 27.40B | 27.20B | 26.18B | 26.34B |
| Cash, Cash Equivalents and Short-Term Investments | 132.22M | 122.83M | 246.96M | 574.14M | 314.76M | 102.72M |
| Total Debt | 18.64B | 17.78B | 19.43B | 19.31B | 18.93B | 19.27B |
| Total Liabilities | 20.51B | 20.48B | 21.16B | 21.12B | 20.57B | 21.10B |
| Stockholders Equity | 6.12B | 5.89B | 6.24B | 6.07B | 5.61B | 5.24B |
Cash Flow | ||||||
| Free Cash Flow | 994.30M | 1.24B | 156.50M | -6.69M | 860.62M | -2.86B |
| Operating Cash Flow | 1.50B | 1.78B | 624.44M | 458.62M | 1.28B | -2.55B |
| Investing Cash Flow | -498.48M | -540.04M | -461.00M | -467.00M | -425.77M | -523.75M |
| Financing Cash Flow | -1.12B | -1.34B | -453.54M | 307.79M | -710.18M | 3.10B |
CarMax Technical Analysis
Positive
40.88
Price Trends
44.56
Positive
43.43
Positive
43.02
Positive
Market Momentum
1.85
Positive
56.04
Neutral
23.98
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMX, the sentiment is Positive. The current price of 40.88 is below the 20-day moving average (MA) of 51.16, below the 50-day MA of 44.56, and below the 200-day MA of 43.02, indicating a neutral trend. The MACD of 1.85 indicates Positive momentum. The RSI at 56.04 is Neutral, neither overbought nor oversold. The STOCH value of 23.98 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KMX.
CarMax Risk Analysis
CarMax disclosed 27 risk factors in its most recent earnings report. CarMax reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
CarMax Peers Comparison
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
69 Neutral | $12.06B | 13.80 | 16.41% | 3.14% | 1.24% | -5.59% | |
66 Neutral | $7.05B | 10.89 | 10.63% | 0.64% | 2.37% | -10.19% | |
63 Neutral | $3.87B | 7.38 | 14.15% | ― | 4.83% | 33.96% | |
63 Neutral | $6.38B | 10.29 | 28.44% | ― | 1.94% | 9.88% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $7.13B | 31.71 | 3.67% | ― | -1.69% | -58.01% | |
59 Neutral | $3.53B | 11.37 | 11.04% | 0.49% | 7.17% | -26.51% |
* Consumer Cyclical Sector Average
KMX
CarMax
51.05
-17.33
-25.34%
ABG
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208.74
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191.68
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GPI
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296.47
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LAD
Lithia Motors
311.69
-31.23
-9.11%
PAG
Penske Automotive Group
184.97
9.46
5.39%
CarMax Corporate Events
Business Operations and StrategyShareholder Meetings
CarMax Shareholders Approve Expanded Stock Incentive Plan
Positive
Jun 24, 2026
At its June 23, 2026 annual meeting, CarMax shareholders approved an amended and restated 2002 Stock Incentive Plan that expands the pool of shares available for equity awards by 1,842,000, introduces minimum vesting requirements, restricts divide...
Business Operations and StrategyExecutive/Board ChangesFinancial DisclosuresPrivate Placements and Financing
CarMax Secures $500 Million Term Loan to Bolster Liquidity
Positive
Jun 17, 2026
On June 15, 2026, CarMax and its CarMax Auto Superstores unit entered a $500 million term loan facility maturing in 2029, using the proceeds primarily to pay down borrowings under a $2.0 billion unsecured revolver and support working capital, with...
Executive/Board Changes
CarMax CFO Assumes Additional Role as Controller Retires
Neutral
Jun 8, 2026
CarMax said that on June 3, 2026, Vice President, Controller and Principal Accounting Officer Jill Livesay notified the company she plans to retire effective at the close of business on July 31, 2026, with the move not stemming from any disagreeme...
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
CarMax Refreshes Board, Adds Veteran Finance Leader
Positive
May 12, 2026
On May 12, 2026, CarMax announced plans to add veteran finance executive Robert O’Shaughnessy to its board of directors, subject to shareholder approval at the 2026 annual meeting, while long-serving directors Shira Goodman and Mitchell Stee...
Business Operations and StrategyExecutive/Board ChangesShareholder Meetings
CarMax refreshes board with new independent director nominees
Positive
Apr 9, 2026
On April 8 and 9, 2026, CarMax, the largest U.S. used-car retailer, moved to refresh its board by nominating William “Bill” Cobb and Jim Kessler as independent directors for election at its 2026 annual meeting. Cobb brings decades of c...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.