CarMax (KMX) AI Stock Analysis

• Market Cap: $8.91B
• Dividend Yield: N/A
• Average Volume (3M): 2.88M
• Price to Earnings (P/E): 16.0
• Beta (1Y): 0.94
• Revenue Growth: 3.17%
• EPS Growth: 42.14%
• Country: US
• Employees: 30,048
• Sector: Consumer Cyclical
• Sector Strength: 66
• Industry: Auto - Dealerships
• EPS (TTM): 1.38
• Shares Outstanding: 150,072,160
• 10 Day Avg. Volume: 2,456,864
• 30 Day Avg. Volume: 2,881,359
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 3.20
• Enterprise Value/Revenue: 1.06
• Enterprise Value/Gross Profit: 9.49
• Enterprise Value/Ebitda: 16.37
• 1Y Price Target: $76.91
• Price Target Upside: 28.06% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 12

• Rating: 71 Outperform
• Price Target: $64.00 ▲(6.56% Upside)

CarMax's strong earnings growth and strategic focus on digital sales are key strengths, contributing to a high earnings call score. Financial performance remains stable, though technical indicators suggest caution. Valuation is moderate, with no dividend yield.

Positive Factors

Financial Strategy

A strong balance sheet and free cash flow allow CarMax to invest in growth opportunities and return capital to shareholders, while maintaining flexibility for strategic initiatives.

Market Position and Strategy

CarMax is the largest used-vehicle retailer in the U.S., strategically positioned with a scalable, defensible model supported by vertical integration and investments in digital tools and AI.

Market Recovery

There is potential support for CarMax shares from a recovery in late-model used car supply starting in 2026 and ongoing share buybacks.

Negative Factors

Competitive Pressure

CarMax faces increased competition from peers like CVNA, which has significantly outperformed in growth and unit economics.

Operational Challenges

Poor underwriting performance at CarMax Auto Finance, compared to peers, has added to the challenges faced by the company in a weak industry environment.

Strategic Execution

CarMax has struggled with disappointing execution and slow strategic pivots, impacting earnings.

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 purchases cars from various sources, including auctions and trade-ins, and then sells them to customers at a markup. In addition to vehicle sales, CarMax earns significant revenue from its financing services, where it offers loans to customers through its own finance arm. This includes both retail and wholesale financing. Additionally, CarMax offers extended service plans and vehicle warranties, which further contribute to its earnings. The company's focus on a transparent, customer-friendly buying experience has built strong brand loyalty, while its national footprint allows it to leverage economies of scale in vehicle procurement and sales. Partnerships with various financial institutions also enhance its financing capabilities, providing customers with competitive loan options.

CarMax Financial Statement Overview

Summary

CarMax is maintaining profitability and cash flow generation despite revenue growth challenges and declining margins. The balance sheet shows a reliance on debt, but this is balanced by effective cash management and shareholder returns.

Income Statement

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

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

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.

Breakdown	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	26.35B	26.54B	29.68B	31.90B	18.95B
Gross Profit	2.90B	2.71B	2.80B	3.29B	2.38B
EBITDA	1.03B	1.04B	1.02B	2.09B	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	19.22B	19.53B	18.93B	19.27B	15.53B
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: Neutral
• Last Price: 60.06
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

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 60.06 is above the 20-day moving average (MA) of 57.39, below the 50-day MA of 62.38, and below the 200-day MA of 72.85, indicating a neutral trend. The MACD of -0.91 indicates Negative momentum. The RSI at 53.11 is Neutral, neither overbought nor oversold. The STOCH value of 65.86 is Neutral, 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
PAG	80 Outperform	$12.14B	12.80	18.11%	2.74%	2.39%	5.84%
ABG	75 Outperform	$4.82B	8.80	15.19%	―	8.39%	40.35%
GPI	75 Outperform	$5.86B	12.54	15.72%	0.41%	19.75%	-10.74%
LAD	73 Outperform	$7.89B	9.12	13.34%	0.70%	10.25%	9.08%
KMX	71 Outperform	$8.91B	15.99	8.97%	―	3.17%	42.14%
AN	70 Outperform	$7.96B	13.13	27.24%	―	3.15%	-12.49%
Sector *	61 Neutral	$17.16B	12.39	-5.32%	3.05%	1.51%	-15.30%

CarMax Corporate Events

CarMax Shareholders Meeting Concludes with Key Decisions

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.