CarMax (KMX) AI Stock Analysis

• Market Cap: $6.12B
• Dividend Yield: N/A
• Average Volume (3M): 3.29M
• Price to Earnings (P/E): 14.3
• Beta (1Y): 0.94
• 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: 3,588,425
• 30 Day Avg. Volume: 3,289,852
• 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: 3.70
• Enterprise Value/Revenue: 0.81
• Enterprise Value/Gross Profit: 7.19
• Enterprise Value/Ebitda: 21.26
• 1Y Price Target: $36.56
• Price Target Upside: -15.27% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 14
• EPS Forecast (FY): 2.65
• Revenue Forecast (FY): $25.58B

• Rating: 60 Neutral
• Price Target: $48.00 ▲(11.24% Upside)
• Action: Reiterated Date: 02/13/26
• Date: Action: Reiterated 02/13/26

The score is driven primarily by mixed financial performance—strong cash flow improvement and stable gross margin offset by declining revenue and high leverage. Earnings call commentary adds pressure due to sales and EPS declines despite credible cost-cutting and finance-segment tailwinds. Technicals and valuation are both moderate, consistent with a stock in partial recovery but without strong fundamental momentum.

Positive Factors

Market position & scale

CarMax's national scale and recognized brand provide durable competitive advantages: broad inventory from trade‑ins, purchasing and marketing leverage, and multi‑market footprint that supports fixed‑cost absorption and omnichannel distribution, sustaining unit flow and customer reach.

Strong cash generation

Very strong free cash flow growth and healthy cash conversion (operating cash flow to net income ~1.18; FCF to net income ~0.78) enhance financial flexibility. This supports reinvestment, debt paydown, and funding of digital and SG&A efficiency programs over the medium term.

Finance & ancillary income growth

CarMax Auto Finance growth diversifies revenue beyond vehicle sales into higher‑margin financing and ancillary products. Reliable CAF income can stabilize earnings amid retail cyclicality and supports cross‑sell economics, underwriting scale, and long‑term profitability improvement.

Negative Factors

High leverage

Elevated leverage (debt/equity ~2.75) constrains capital flexibility and raises refinancing and interest‑rate sensitivity. High debt limits room for strategic investments, increases default risk in stress scenarios, and makes sustained margin recovery more urgent to service obligations.

Declining sales and volumes

Material declines in sales and retail unit volumes signal demand pressure and competitive headwinds. Lower volumes reduce operating leverage, force price or margin concessions, and require ongoing investment in marketing and omnichannel conversion to rebuild sustainable unit growth.

Profitability compression

Sharp EPS decline and a low net margin (~1.77% TTM) reflect margin pressure from higher acquisition costs, restructuring charges, and competitive pricing. Sustaining profitable growth will require successful cost reductions and margin recovery amid challenging sales trends.

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

Mixed fundamentals: stable gross margin (11.06% TTM) and very strong free cash flow growth (184.50% TTM) support the score, but revenue declined (-1.63% TTM) and leverage is high (debt-to-equity 2.75 TTM), which increases risk.

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	TTM	Feb 2025	Feb 2024	Feb 2023	Feb 2022	Feb 2021
Income Statement
Total Revenue	27.83B	28.21B	28.21B	31.13B	33.20B	20.09B
Gross Profit	3.15B	3.22B	3.04B	3.24B	3.88B	2.94B
EBITDA	1.07B	1.09B	1.06B	1.04B	1.87B	1.29B
Net Income	457.84M	500.56M	479.20M	484.76M	1.15B	746.92M
Balance Sheet
Total Assets	25.56B	27.40B	27.20B	26.18B	26.34B	21.54B
Cash, Cash Equivalents and Short-Term Investments	204.94M	246.96M	574.14M	314.76M	102.72M	132.32M
Total Debt	16.68B	19.43B	19.31B	18.93B	19.27B	15.66B
Total Liabilities	19.50B	21.16B	21.12B	20.57B	21.10B	17.18B
Stockholders Equity	6.06B	6.24B	6.07B	5.61B	5.24B	4.36B
Cash Flow
Free Cash Flow	1.95B	156.50M	-6.69M	860.62M	-2.86B	503.22M
Operating Cash Flow	2.48B	624.44M	458.62M	1.28B	-2.55B	667.76M
Investing Cash Flow	-524.35M	-461.00M	-467.00M	-425.77M	-523.75M	-128.18M
Financing Cash Flow	-2.02B	-453.54M	307.79M	-710.18M	3.10B	-424.02M

CarMax Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 43.15
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMX, the sentiment is Negative. The current price of 43.15 is below the 20-day moving average (MA) of 44.81, below the 50-day MA of 43.51, and below the 200-day MA of 51.91, indicating a bearish trend. The MACD of -0.27 indicates Positive momentum. The RSI at 46.58 is Neutral, neither overbought nor oversold. The STOCH value of 47.93 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KMX.

CarMax Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PAG	71 Outperform	$10.66B	11.55	16.56%	3.14%	2.25%	8.92%
ABG	62 Neutral	$4.23B	8.76	13.31%	―	8.07%	60.95%
GPI	62 Neutral	$4.00B	13.25	11.10%	0.49%	19.45%	-24.27%
LAD	62 Neutral	$6.87B	8.83	12.34%	0.64%	8.56%	17.84%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	60 Neutral	$6.12B	14.27	7.46%	―	0.12%	2.78%
AN	58 Neutral	$6.88B	11.61	27.05%	―	6.06%	-1.71%

CarMax Corporate Events

CarMax Appoints Keith Barr as New President and CEO

On February 10, 2026, CarMax’s board appointed former InterContinental Hotels Group chief executive Keith Barr as president and CEO, effective March 16, 2026, and named him to an expanded 10-member board with a compensation package anchored by a $1.25 million base salary, performance-linked bonus and substantial long-term equity incentives. The move ends David McCreight’s interim CEO tenure, returns him to board duties, and brings in a leader known for large-scale digital transformation and customer-experience improvements, signaling CarMax’s intent to accelerate omni-channel growth and technology-driven efficiencies in the competitive used-vehicle retail market while reinforcing board continuity through Tom Folliard’s continued role as interim executive chair through the June 2026 annual meeting.

Mr. Barr’s severance protections, relocation benefits and personal aircraft use underscore CarMax’s investment in securing a high-profile consumer-services operator to steer its next growth phase in a fragmented industry. His track record at IHG of expanding global brands, modernizing technology platforms and strengthening loyalty programs suggests CarMax aims to leverage similar capabilities to deepen customer engagement, gain share in used autos and sustain its long-standing reputation as a leading employer and trusted retailer.

The most recent analyst rating on (KMX) stock is a Hold with a $49.00 price target. To see the full list of analyst forecasts on CarMax stock, see the KMX Stock Forecast page.