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Carmax Inc (KMX)
NYSE:KMX

CarMax (KMX) AI Stock Analysis

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KM

CarMax

(NYSE:KMX)

Rating:55Neutral
Price Target:
$76.00
▲(10.50%Upside)
CarMax's overall score reflects strong earnings performance and technical momentum, offset by valuation concerns and potential strategic disruptions due to key executive departures. The company's stable financial position and strategic initiatives in digital expansion and share repurchases support a positive outlook, though challenges remain in CAF income and economic uncertainties.
Positive Factors
Earnings
CarMax's first-quarter comps accelerated to 8.1%, ahead of expectations, yielding revenue growth of 6.1%.
Financial Performance
Retail GPU increased $60 year-over-year, to $2,407, ahead of projections and consensus.
Operational Strategy
The company has the right strategy in place to continue retail volume growth via expanded reconditioning capacity and more profitable sourcing channels.
Negative Factors
Economic Conditions
Investors remain uncertain around Carmax's ability to sustain this level of growth with moderating economic activity and policy uncertainty.
Market Share
Core issue around lack of meaningful progress on used industry share gains with little margin offset is likely to apply continued pressure on the stock.
Omni-channel Initiatives
Visibility on any meaningful share and margin recovery remains elusive, with benefits from omni-channel still largely disappointing.

CarMax (KMX) vs. SPDR S&P 500 ETF (SPY)

CarMax Business Overview & Revenue Model

Company DescriptionCarMax, Inc. (KMX) is a leading retailer of used vehicles in the United States, operating through a network of retail locations and an online platform. The company offers a wide selection of used cars, trucks, and SUVs, along with financing options, extended service plans, and vehicle appraisals. CarMax is known for its no-haggle pricing model, providing customers with a transparent and straightforward buying experience.
How the Company Makes MoneyCarMax 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 Key Performance Indicators (KPIs)

Any
Any
Unit Sales by Segment
Unit Sales by Segment
Reveals the number of vehicles sold across different segments, highlighting consumer preferences and the company's market penetration in various categories.
Chart InsightsCarMax's used and wholesale unit sales show a recovery trend after a dip in 2023, with recent earnings highlighting a 6.2% rise in retail unit sales and a 3.1% increase in wholesale. This growth is supported by record vehicle purchases and enhanced digital sales capabilities, positioning CarMax for further market share expansion. However, declining wholesale gross profit per unit and service profitability challenges could impact future margins. The strategic focus on digital and omni-channel sales is a positive driver, but potential tariff impacts remain a concern.
Data provided by:Main Street Data

CarMax Earnings Call Summary

Earnings Call Date:May 31, 2025
(Q1-2026)
|
% Change Since: -14.09%|
Next Earnings Date:Sep 25, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong sales growth, record vehicle purchases, and significant EPS growth, supported by SG&A leverage and AI-driven efficiencies. However, there were challenges in CAF income due to increased loan loss provisions and decreased average selling prices. Despite these lowlights, the strong performance in key growth metrics and strategic initiatives suggests a positive outlook.
Q1-2026 Updates
Positive Updates
Record Dealer Vehicle Purchases
CarMax achieved an all-time record by buying more vehicles from both consumers and dealers, with a 38% increase in dealer purchases year-over-year.
Strong Retail and Wholesale Unit Growth
Retail unit sales increased by 9%, with used unit comps up 8.1%, while wholesale unit sales increased by 1.2% year-over-year.
Earnings Per Share Growth
The company reported a 42% increase in earnings per share, marking the fourth consecutive quarter of positive retail unit comps and double-digit EPS growth.
SG&A Leverage and AI Implementation
SG&A expenses were leveraged by 180 basis points to 74%, and the company improved efficiency through AI technology, including a 30% improvement in containment rate for their AI-powered virtual assistant.
Increased Share Repurchases
CarMax doubled the pace of their share repurchases, buying back approximately 3 million shares for a total spend of $200 million.
Negative Updates
Decline in CAF Income
CarMax Auto Finance (CAF) income for the quarter was $142 million, which was down $5 million from the previous fiscal year.
Lower Average Selling Prices
The average selling price for retail vehicles decreased by approximately $400 to $26,100, and the average wholesale selling price declined by $150 to $8,000 compared to the previous year.
Increased Loan Loss Provisions
CAF's loan loss provision was $102 million due to higher sales and lower credit quality, along with uncertain economic outlooks requiring additional reserves.
Company Guidance
During the first quarter of fiscal year 2026, CarMax, Inc. reported significant achievements and guidance metrics, highlighting a 42% growth in earnings per share (EPS) and a 6% increase in total sales to $7.5 billion compared to the previous year. The company achieved a record high in retail gross profit per used unit at $2,407, while wholesale unit sales grew 1.2% despite a decline in average wholesale selling price to $8,000. CarMax bought approximately 336,000 vehicles, with a notable increase in dealer purchases by 38%. The company also doubled its share repurchase pace, spending $200 million on approximately 3 million shares. CarMax's digital capabilities supported 80% of retail unit sales, with 66% through omni-channel and 14% online sales. Net interest margin for CarMax Auto Finance (CAF) increased to 6.5%, despite a $5 million decrease in CAF income to $142 million. The company also earmarked a $632 million loan pool for non-prime securitization, aiming to mitigate risk while supporting growth.

CarMax Financial Statement Overview

Summary
CarMax maintains profitability and strong cash flow generation despite revenue growth challenges and declining margins. The balance sheet shows reliance on debt, balanced by effective cash management and returns to shareholders. Overall, the company is stable with scope for improvement in revenue growth and margin expansion.
Income Statement
70
Positive
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
65
Positive
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
75
Positive
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.
BreakdownTTMMar 2025Mar 2024Mar 2023Mar 2022Mar 2021
Income Statement
Total Revenue26.79B26.35B26.54B29.68B31.90B18.95B
Gross Profit3.00B2.90B2.71B2.80B3.29B2.38B
EBITDA1.53B1.03B1.04B1.02B2.09B1.29B
Net Income558.50M500.56M479.20M484.76M1.15B746.92M
Balance Sheet
Total Assets27.39B27.40B27.20B26.18B26.34B21.54B
Cash, Cash Equivalents and Short-Term Investments262.82M246.96M574.14M314.76M102.72M132.32M
Total Debt17.92B19.22B19.53B18.93B19.27B15.53B
Total Liabilities21.10B21.16B21.12B20.57B21.10B17.18B
Stockholders Equity6.29B6.24B6.07B5.61B5.24B4.36B
Cash Flow
Free Cash Flow540.91M156.50M-6.69M860.62M-2.86B503.22M
Operating Cash Flow1.04B624.44M458.62M1.28B-2.55B667.76M
Investing Cash Flow-496.32M-461.00M-467.00M-425.77M-523.75M-128.18M
Financing Cash Flow-470.58M-453.54M307.79M-710.18M3.10B-424.02M

CarMax Technical Analysis

Technical Analysis Sentiment
Positive
Last Price68.78
Price Trends
50DMA
66.36
Positive
100DMA
71.23
Negative
200DMA
75.29
Negative
Market Momentum
MACD
0.93
Negative
RSI
53.76
Neutral
STOCH
74.45
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 68.78 is above the 20-day moving average (MA) of 67.45, above the 50-day MA of 66.36, and below the 200-day MA of 75.29, indicating a neutral trend. The MACD of 0.93 indicates Negative momentum. The RSI at 53.76 is Neutral, neither overbought nor oversold. The STOCH value of 74.45 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 26 risk factors in its most recent earnings report. CarMax reported the most risks in the "Production" 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

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
LALAD
82
Outperform
$9.01B10.9112.95%0.62%12.96%-6.25%
LALAD
82
Outperform
$9.01B10.9112.95%0.62%12.96%-6.25%
PAPAG
71
Outperform
$11.97B12.7518.57%2.79%3.29%-1.29%
PAPAG
71
Outperform
$11.97B12.7518.57%2.79%3.29%-1.29%
ABABG
67
Neutral
$5.00B12.1011.92%11.11%-23.41%
ABABG
67
Neutral
$5.00B12.1011.92%11.11%-23.41%
62
Neutral
C$5.18B11.2618.64%3.62%3.35%6.70%
ANAN
60
Neutral
$7.97B12.5028.45%-0.24%-19.76%
ANAN
60
Neutral
$7.97B12.5028.45%-0.24%-19.76%
GPGPI
59
Neutral
$5.97B13.0116.25%0.43%15.13%-15.98%
GPGPI
59
Neutral
$5.97B13.0116.25%0.43%15.13%-15.98%
KMKMX
55
Neutral
$10.32B19.028.97%3.17%42.14%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
KMX
CarMax
68.78
-3.48
-4.82%
ABG
Asbury
254.34
31.74
14.26%
ABG
Asbury
254.34
31.74
14.26%
AN
AutoNation
211.33
55.19
35.35%
AN
AutoNation
211.33
55.19
35.35%
GPI
Group 1 Automotive
454.94
175.32
62.70%
GPI
Group 1 Automotive
454.94
175.32
62.70%
LAD
Lithia Motors
346.22
104.82
43.42%
LAD
Lithia Motors
346.22
104.82
43.42%
PAG
Penske Automotive Group
180.92
40.95
29.26%

CarMax Corporate Events

Executive/Board ChangesShareholder Meetings
CarMax Shareholders Meeting Concludes with Key Decisions
Neutral
Jun 26, 2025

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.

Executive/Board ChangesBusiness Operations and Strategy
CarMax Announces Departure of Key Executive Officer
Negative
May 15, 2025

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.

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.Date of analysis: Jun 25, 2025