CarMax Inc (KMX)
NYSE:KMX
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CarMax
(NYSE:KMX)
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Rating:59Neutral
Price Target:
$51.00
▲(24.76% Upside)
Action:Reiterated
Date:06/12/26
The score is anchored by a mixed financial profile: improving TTM free cash flow is a key positive, but revenue decline, very thin margins, and elevated leverage limit fundamental strength. Technicals are supportive (price above key moving averages) but appear overextended, while valuation (P/E ~28.9 with no dividend yield provided) is a headwind. Earnings-call guidance reinforces near-term margin pressure despite clear SG&A and product/finance initiatives, and recent governance updates are a modest positive.
Positive Factors
Improved cash generation
A meaningful rebound in operating and free cash flow provides durable internal funding for operations, reinvestment, and deleveraging. For a cyclical auto retailer, sustained positive FCF supports working-capital needs, funds strategic initiatives, and cushions earnings volatility across cycles.
Negative Factors
Revenue decline and thin margins
A sustained revenue decline and compressed net margins materially reduce earnings power and resilience. For a retail model with high operating fixed costs, persistently thin margins constrain reinvestment, debt paydown and the ability to withstand another demand or price shock.
Read all positive and negative factors
Positive Factors
Negative Factors
Improved cash generation
A meaningful rebound in operating and free cash flow provides durable internal funding for operations, reinvestment, and deleveraging. For a cyclical auto retailer, sustained positive FCF supports working-capital needs, funds strategic initiatives, and cushions earnings volatility across cycles.
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
$7.27B
Dividend YieldN/A
Average Volume (3M)2.97M
Price to Earnings (P/E)30.5
Beta (1Y)0.75
Revenue Growth-1.64%
EPS Growth-50.32%
CountryUS
Employees30,048
SectorConsumer Cyclical
Sector Strength84
IndustryAuto - Dealerships
Share Statistics
EPS (TTM)1.68
Shares Outstanding141,820,710
10 Day Avg. Volume3,249,108
30 Day Avg. Volume2,968,346
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 Cap1.23
Enterprise Value/Revenue0.35
Enterprise Value/Gross Profit3.20
Enterprise Value/Ebitda5.58
Forecast
1Y Price Target
$38.27Price Target Upside-6.38% Downside
Rating ConsensusHold
Number of Analyst Covering13
EPS Forecast (FY)2.34
Revenue Forecast (FY)$25.93B
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:Apr 14, 2026
(Q4-2026)
| % Change Since: |
Next Earnings Date:Jun 17, 2026
Earnings Call Sentiment Neutral
The call balanced meaningful operational progress and strategic action (improved sales trends, pricing/marketing/digital levers, SG&A reduction target increased to $200M, CAF penetration growth and product redesigns) against significant near-term financial headwinds (noncash goodwill impairment, restructuring charges, reduced gross profits and margins, adjusted EPS decline, CAF income decline and elevated provisions). Management presented a clear plan to prioritize the customer, leverage technology, and materially reduce SG&A, but also acknowledged that FY'27 will see continued margin pressure and a cautious capital posture while the business rebalances.Positive Updates
Sales Stabilization and Unit Growth
Total sales of $5.9 billion (down 1% year-over-year) while combined retail and wholesale vehicle sales were ~304,000 units, up 1% versus the prior-year fourth quarter — showing a positive change in trend versus Q2 and Q3.
Negative Updates
Net Loss and EPS Pressure
Reported a fourth-quarter net loss per diluted share of $0.85 versus prior-year EPS of $0.58; adjusted EPS was $0.34 versus $0.64 a year ago (about a 47% decline).
Read all updates
Q4-2026 Updates
Positive
Negative
Sales Stabilization and Unit Growth
Total sales of $5.9 billion (down 1% year-over-year) while combined retail and wholesale vehicle sales were ~304,000 units, up 1% versus the prior-year fourth quarter — showing a positive change in trend versus Q2 and Q3.
Read all positive updates
Company Guidance
The company guided that for FY‑27 it will take a more dynamic approach to margin management with used margins expected to decline “broadly in line” with the Q4 year‑over‑year trend (with Q1 expected to show the largest YoY decline, closer to ~$300 per unit), while rolling out its redesigned extended protection plan (EPP/MaxCare) nationally (expected to add about ~$35 per unit in FY‑27 as it ramps). Management raised its FY‑27 exit‑rate SG&A reduction target to $200 million (up from $150 million), will transition SG&A efficiency to a per‑total‑unit metric (retail + wholesale) and expects SG&A to lever in FY‑27 excluding FY‑26 restructuring charges, though roughly half of in‑year savings will be offset by the annualization of materially reduced corporate bonus and share‑based comp, inflation and new‑store growth. Capital spend is expected to be about $400 million in FY‑27 (down materially vs. the prior two years), with plans to open 4 new stores plus new off‑site reconditioning/auction capacity (two reconditioning & auction sites and two off‑site auction locations), and the company has paused buybacks while leverage sits slightly above target after repurchasing 1.3 million shares for $50 million in Q4 (approximately $1.31 billion repurchase authorization remaining at quarter end). On financing, CarMax Auto Finance plans to expand full‑spectrum penetration (Q4 origination ≈ $1.9 billion, CAF penetration 42.8% net of 3‑day payoffs, weighted avg. contract rate 11.1%, Tier‑2/3 = 25.6%), will lean on diversified/on‑ and off‑balance sheet funding (designated $100 million nonprime pool held for sale), and expects CAF to contribute to higher retained finance income while provisioning and reserves (Q4 reserves $453 million, 2.78% of loans; Q4 LLP $74 million) are managed as originations into lower credit tiers grow.CarMax Financial Statement Overview
Summary
Income Statement
54
Neutral
Balance Sheet
57
Neutral
Cash Flow
68
Positive
| Breakdown | Feb 2026 | Feb 2025 | Feb 2024 | Feb 2023 | Feb 2022 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 25.88B | 26.35B | 26.54B | 29.68B | 31.90B |
| Gross Profit | 2.81B | 2.90B | 2.71B | 2.80B | 3.29B |
| EBITDA | 1.61B | 1.84B | 1.67B | 1.33B | 2.09B |
| Net Income | 247.29M | 500.56M | 479.20M | 484.76M | 1.15B |
Balance Sheet | |||||
| Total Assets | 26.37B | 27.40B | 27.20B | 26.18B | 26.34B |
| Cash, Cash Equivalents and Short-Term Investments | 122.83M | 246.96M | 574.14M | 314.76M | 102.72M |
| Total Debt | 2.77B | 19.43B | 19.31B | 18.93B | 19.27B |
| Total Liabilities | 20.48B | 21.16B | 21.12B | 20.57B | 21.10B |
| Stockholders Equity | 5.89B | 6.24B | 6.07B | 5.61B | 5.24B |
Cash Flow | |||||
| Free Cash Flow | 1.24B | 156.50M | -6.69M | 860.62M | -2.86B |
| Operating Cash Flow | 1.78B | 624.44M | 458.62M | 1.28B | -2.55B |
| Investing Cash Flow | -540.04M | -461.00M | -467.00M | -425.77M | -523.75M |
| Financing Cash Flow | -1.34B | -453.54M | 307.79M | -710.18M | 3.10B |
CarMax Technical Analysis
Positive
40.88
Price Trends
41.71
Positive
42.60
Positive
43.69
Positive
Market Momentum
2.78
Negative
77.20
Negative
91.91
Negative
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 43.71, below the 50-day MA of 41.71, and below the 200-day MA of 43.69, indicating a bullish trend. The MACD of 2.78 indicates Negative momentum. The RSI at 77.20 is Negative, neither overbought nor oversold. The STOCH value of 91.91 is Negative, 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 | $11.90B | 12.86 | 16.41% | 3.14% | 1.24% | -5.59% | |
66 Neutral | $7.15B | 10.32 | 10.61% | 0.64% | 2.37% | -10.19% | |
63 Neutral | $3.72B | 6.92 | 14.15% | ― | 4.83% | 33.96% | |
63 Neutral | $6.41B | 9.79 | 28.44% | ― | 1.94% | 9.88% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
59 Neutral | $7.27B | 30.52 | 4.05% | ― | -1.64% | -50.32% | |
59 Neutral | $3.87B | 11.97 | 11.04% | 0.49% | 7.17% | -26.51% |
* Consumer Cyclical Sector Average
KMX
CarMax
51.26
-14.59
-22.16%
ABG
Asbury
199.53
-40.45
-16.86%
AN
AutoNation
191.53
-1.51
-0.78%
GPI
Group 1 Automotive
325.33
-112.13
-25.63%
LAD
Lithia Motors
313.38
-15.84
-4.81%
PAG
Penske Automotive Group
180.96
14.11
8.45%
CarMax Corporate Events
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.