CarMax (KMX) AI Stock Analysis

• Market Cap: $5.80B
• Dividend Yield: N/A
• Average Volume (3M): 3.56M
• Price to Earnings (P/E): 14.3
• Beta (1Y): 0.87
• Revenue Growth: 0.12%
• EPS Growth: 2.78%
• Country: US
• Employees: 30,048
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 0.43
• Shares Outstanding: 141,796,650
• 10 Day Avg. Volume: 2,253,142
• 30 Day Avg. Volume: 3,564,558
• PEG Ratio: 4.11
• Price to Book (P/B): 2.06
• Price to Sales (P/S): 0.46
• P/FCF Ratio: 82.35
• Enterprise Value/Market Cap: 3.83
• Enterprise Value/Revenue: 0.81
• Enterprise Value/Gross Profit: 7.39
• Enterprise Value/Ebitda: 18.07
• 1Y Price Target: $33.60
• Price Target Upside: -22.08% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 13
• EPS Forecast (FY): 2.64
• Revenue Forecast (FY): $25.59B

• Rating: 61 Neutral
• Price Target: $42.00 ▼(-2.60% Downside)

CarMax's overall stock score reflects a mixed financial performance with strong cash flow but declining revenue and high leverage. Technical analysis shows cautious signals, and while the valuation is reasonable, the earnings call highlights significant challenges. The recent CEO change adds uncertainty, but strategic initiatives could provide long-term benefits.

Positive Factors

Cash Flow Management

Strong free cash flow growth indicates improved cash generation, allowing for potential reinvestment in business operations or debt reduction, enhancing long-term financial stability.

Digital and Omnichannel Development

Investments in digital capabilities enhance customer experience and conversion rates, positioning CarMax to better compete in the evolving retail landscape and drive future growth.

CarMax Auto Finance Growth

Growth in CarMax Auto Finance income indicates a strong financial services segment, contributing to overall profitability and providing a diversified revenue stream.

Negative Factors

Decline in Total Sales

A decline in total sales suggests potential market pressures or operational challenges, which could impact revenue growth and market position if not addressed.

High Leverage

Significant leverage poses financial risks and limits flexibility, potentially affecting the company's ability to invest in growth opportunities or weather economic downturns.

Leadership Uncertainty

Leadership changes can create strategic uncertainty, impacting decision-making and execution of long-term plans, especially during periods of declining performance.

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's financial performance is mixed, with strong cash flow management and stable gross margins. However, challenges include declining revenue and high leverage, which could pose risks. The company needs to focus on revenue growth and leverage management to enhance financial stability.

Income Statement

CarMax's income statement shows a mixed performance. The TTM gross profit margin is stable at 11.06%, indicating consistent profitability from sales. However, the net profit margin has slightly decreased to 1.77%, reflecting challenges in maintaining bottom-line growth. Revenue has declined by 1.63% TTM, suggesting potential market pressures or operational challenges. The EBIT and EBITDA margins are modest, with TTM figures at 4.40% and 5.36%, respectively, indicating moderate operational efficiency.

Balance Sheet

CarMax's balance sheet reveals a high debt-to-equity ratio of 2.75 TTM, indicating significant leverage which could pose financial risks if not managed carefully. The return on equity is relatively low at 7.39% TTM, suggesting limited efficiency in generating returns from shareholders' equity. The equity ratio stands at 23.73%, reflecting a moderate level of equity financing relative to total assets.

Cash Flow

The cash flow statement shows strong free cash flow growth of 184.50% TTM, indicating improved cash generation capabilities. The operating cash flow to net income ratio is healthy at 1.18, suggesting effective conversion of income into cash. The free cash flow to net income ratio is robust at 0.78, highlighting efficient cash management and potential for reinvestment or debt reduction.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	28.21B	28.21B	31.13B	33.20B	20.09B
Gross Profit	3.22B	3.04B	3.24B	3.88B	2.94B
EBITDA	1.09B	1.06B	1.04B	1.87B	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	19.43B	19.31B	18.93B	19.27B	15.66B
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: Positive
• Last Price: 43.12
• 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 Positive. The current price of 43.12 is above the 20-day moving average (MA) of 39.96, above the 50-day MA of 38.48, and below the 200-day MA of 55.84, indicating a neutral trend. The MACD of 0.50 indicates Negative momentum. The RSI at 67.94 is Neutral, neither overbought nor oversold. The STOCH value of 83.52 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for KMX.

CarMax Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
LAD	76 Outperform	$7.93B	9.46	13.44%	0.64%	8.56%	17.84%
GPI	73 Outperform	$5.04B	14.03	12.27%	0.49%	19.45%	-24.27%
PAG	71 Outperform	$10.69B	11.43	17.30%	3.14%	2.25%	8.92%
AN	70 Neutral	$7.62B	12.63	27.16%	―	6.06%	-1.71%
ABG	67 Neutral	$4.71B	8.48	15.49%	―	8.07%	60.95%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	61 Neutral	$5.80B	14.26	7.46%	―	0.12%	2.78%

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.

The most recent analyst rating on (KMX) stock is a Buy with a $59.00 price target. To see the full list of analyst forecasts on CarMax stock, see the KMX Stock Forecast page.