CarMax (KMX) AI Stock Analysis

• Market Cap: $6.05B
• Dividend Yield: N/A
• Average Volume (3M): 6.29M
• Price to Earnings (P/E): 12.2
• Beta (1Y): 0.93
• Revenue Growth: 2.17%
• EPS Growth: 28.59%
• Country: US
• Employees: 30,048
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 0.64
• Shares Outstanding: 146,845,050
• 10 Day Avg. Volume: 2,651,498
• 30 Day Avg. Volume: 6,294,250
• PEG Ratio: 4.11
• Price to Book (P/B): 2.06
• Price to Sales (P/S): 0.49
• P/FCF Ratio: 82.35
• Enterprise Value/Market Cap: 4.52
• Enterprise Value/Revenue: 1.04
• Enterprise Value/Gross Profit: 9.25
• Enterprise Value/Ebitda: 15.10
• 1Y Price Target: $41.08
• Price Target Upside: -1.37% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 17
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 60 Neutral
• Price Target: $41.00 ▼(-1.56% Downside)

CarMax's overall stock score reflects stable profitability and strong cash flow, but is weighed down by high leverage and declining sales. The technical analysis suggests bearish trends, while the valuation indicates potential undervaluation. The earnings call and recent CEO change highlight significant challenges and uncertainties, impacting the overall outlook.

Positive Factors

Strong Cash Flow Generation

Strong cash flow generation provides CarMax with the financial flexibility to invest in growth initiatives and manage debt, supporting long-term stability.

SG&A Reductions Initiative

The SG&A reductions initiative aims to enhance operational efficiency, potentially improving profitability and competitive positioning over the long term.

CAF Expansion

The expansion of CarMax Auto Finance strengthens its financing capabilities, enhancing customer offerings and supporting revenue growth.

Negative Factors

High Leverage

High leverage can strain financial resources, limiting CarMax's ability to invest in growth opportunities and increasing vulnerability to economic downturns.

Declining Sales

Declining sales indicate potential challenges in market demand and competitive pressures, which could impact long-term revenue growth and market position.

CEO Change

The CEO change amidst strategic shifts introduces uncertainty in leadership and strategic direction, potentially affecting long-term business execution.

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, which constitutes its main revenue stream. The company also earns money through the sale of vehicle financing and extended service plans. Financing options are provided through CarMax Auto Finance, which allows customers to access loans and leases. Additionally, CarMax benefits from trade-ins, where customers sell their old vehicles to the company, providing inventory for resale. The company's unique no-haggle pricing model helps maintain customer trust and satisfaction, contributing to repeat business. Furthermore, partnerships with various financial institutions enhance its financing offerings, while its investment in technology and online sales platforms has broadened its reach and improved operational efficiency.

CarMax Financial Statement Overview

Summary

CarMax demonstrates stable profitability and strong cash flow generation, but faces challenges with revenue growth and high leverage. The income statement reflects consistent margins, while the balance sheet indicates significant debt levels. Cash flow performance is robust, with positive growth trends. The company should focus on managing leverage and improving revenue growth to enhance financial stability.

Income Statement

CarMax's income statement shows a mixed performance. The TTM data indicates a slight decline in revenue growth at -1.56%, which is a concern. However, the company maintains a stable gross profit margin of 11.21% and a net profit margin of 1.98%. The EBIT margin of 4.66% and EBITDA margin of 4.85% suggest moderate profitability. Overall, the income statement reflects stable profitability but with challenges in revenue growth.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 2.87, indicating significant leverage, which could pose a risk. Return on equity is moderate at 8.36%, reflecting decent profitability relative to equity. The equity ratio stands at 22.89%, suggesting a moderate level of equity financing. While the company is profitable, the high leverage is a potential concern.

Cash Flow

CarMax's cash flow statement shows positive trends, with a free cash flow growth rate of 26.65% in the TTM period. The operating cash flow to net income ratio is 0.54, indicating reasonable cash generation relative to net income. The free cash flow to net income ratio of 0.57 suggests that the company is generating sufficient free cash flow. Overall, the cash flow position is strong, with positive growth and adequate cash generation.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	26.37B	26.35B	26.54B	29.68B	31.90B	18.95B
Gross Profit	2.96B	2.90B	2.71B	2.80B	3.29B	2.38B
EBITDA	1.81B	1.07B	1.04B	1.02B	2.09B	1.29B
Net Income	521.07M	500.56M	479.20M	484.76M	1.15B	746.92M
Balance Sheet
Total Assets	27.08B	27.40B	27.20B	26.18B	26.34B	21.54B
Cash, Cash Equivalents and Short-Term Investments	540.37M	246.96M	574.14M	314.76M	102.72M	132.32M
Total Debt	17.77B	19.43B	19.31B	18.93B	19.27B	15.53B
Total Liabilities	20.88B	21.16B	21.12B	20.57B	21.10B	17.18B
Stockholders Equity	6.20B	6.24B	6.07B	5.61B	5.24B	4.36B
Cash Flow
Free Cash Flow	685.04M	156.50M	-6.69M	860.62M	-2.86B	503.22M
Operating Cash Flow	1.21B	624.44M	458.62M	1.28B	-2.55B	667.76M
Investing Cash Flow	-518.00M	-461.00M	-467.00M	-425.77M	-523.75M	-128.18M
Financing Cash Flow	-638.18M	-453.54M	307.79M	-710.18M	3.10B	-424.02M

CarMax Technical Analysis

• Technical Analysis Sentiment: Neutral
• Last Price: 41.65
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMX, the sentiment is Neutral. The current price of 41.65 is above the 20-day moving average (MA) of 37.15, above the 50-day MA of 40.00, and below the 200-day MA of 58.83, indicating a neutral trend. The MACD of 0.27 indicates Negative momentum. The RSI at 62.97 is Neutral, neither overbought nor oversold. The STOCH value of 86.11 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for KMX.

CarMax Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LAD	76 Outperform	$8.54B	10.19	13.44%	0.61%	8.56%	17.84%
GPI	73 Outperform	$5.30B	14.78	12.27%	0.47%	19.45%	-24.27%
PAG	71 Outperform	$11.20B	11.98	17.30%	3.04%	2.25%	8.92%
AN	70 Neutral	$8.09B	12.92	27.16%	―	6.06%	-1.71%
ABG	67 Neutral	$4.75B	8.72	15.49%	―	8.07%	60.95%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	60 Neutral	$6.05B	12.23	8.42%	―	2.17%	28.59%

CarMax Corporate Events

CarMax Announces CEO Change Amidst Strategic Shift

On November 4, 2025, CarMax announced the termination of CEO William D. Nash, effective December 1, 2025, and the appointment of David W. McCreight as Interim President and CEO. The leadership change is part of CarMax’s strategy to strengthen its business amid declining sales and profitability. The company also provided a preliminary financial outlook for the third quarter of fiscal year 2026, expecting a decrease in comparable store used unit sales and net earnings per diluted share impacted by leadership changes and increased marketing expenses.