CarMax, Inc. (NYSE:KMX) Quarterly Earnings Preview

• CarMax, Inc. (NYSE:KMX) stock dropped 17% following a weaker-than-expected earnings report.
• The company's fourth-quarter earnings per share (EPS) increased by 81% but fell short of analyst expectations.
• Despite recent challenges, CarMax's stock reaching a one-year low could be seen as a potential buying opportunity for investors.

CarMax, Inc. (NYSE:KMX) is a leading retailer of used vehicles in the United States. The company operates through two segments: CarMax Sales Operations and CarMax Auto Finance. CarMax is known for its no-haggle pricing and comprehensive vehicle inspection process. It competes with other used car retailers like AutoNation and Carvana. Recently, RBC Capital updated its rating for CarMax to "Underperform," maintaining its previous grade, with a stock price of $62.33 at the time of the announcement.

CarMax's stock experienced a significant decline, dropping 17% in a single day after releasing its earnings report. The company reported weaker-than-expected earnings, which negatively impacted investor sentiment. CarMax missed analysts' estimates and withdrew its guidance for long-term growth, contributing to the negative outlook. Despite these challenges, the stock had been trading at a premium, and the recent drop might present a buying opportunity.

The company's fourth-quarter earnings per share (EPS) showed a substantial 81% increase from the previous year, reaching $0.58 per share. However, this was below analyst expectations of $0.66. The current stock price of KMX is $62.33, reflecting a decrease of 3.50% or $2.26. Today, the stock has traded as low as $61.67 and as high as $64.19, indicating some volatility in the market.

Over the past year, KMX has reached a high of $91.25 and a low of $61.69. The company's market capitalization stands at approximately $9.52 billion, with a trading volume of 2,267,945 shares on the NYSE. Despite the recent challenges, CarMax's stock price reaching a one-year low might attract investors looking for potential value in the market.

CarMax, Inc. (NYSE:KMX) is a leading retailer of used cars in the United States. The company operates through two segments: CarMax Sales Operations and CarMax Auto Finance. It offers a wide range of vehicles and related products and services, including financing options. CarMax competes with other used car retailers like AutoNation and Carvana.

On April 10, 2025, CarMax reported its fiscal fourth-quarter earnings, revealing an earnings per share (EPS) of $0.58. This figure fell short of the estimated $0.63, as highlighted by Barrons. Despite this, CarMax's revenue reached $6.003 billion, surpassing the expected $5.980 billion. This indicates strong sales performance despite the earnings miss.

The company's earnings fell short of Wall Street's expectations, with analysts anticipating an EPS of $0.66. CarMax attributed this shortfall to higher borrowing costs, which have deterred some consumers from making significant purchases. This has contributed to a decline in the stock following the earnings report.

Despite the earnings miss, CarMax experienced substantial year-over-year growth in earnings. The stock saw a significant increase, with shares rising by 8.87%. This suggests that investors remain optimistic about the company's long-term prospects, despite the short-term challenges.

CarMax's financial health is reflected in its debt-to-equity ratio of approximately 2.84, indicating it has more than twice as much debt as equity. However, the company's current ratio of about 2.30 suggests a strong ability to cover its short-term liabilities with its short-term assets, providing a cushion against financial uncertainties.

• The consensus price target for CarMax, Inc. (NYSE:KMX) has increased from $82.67 to $90 over the past year, indicating analysts' growing confidence in the company.
• Analyst Michael Montani from Evercore ISI has set a more optimistic price target of $105, reflecting a positive view on CarMax's future prospects.
• The Zacks Consensus Estimate for CarMax's fourth-quarter earnings is 64 cents per share with revenues of $5.97 billion, highlighting the company's financial health and market position.

CarMax, Inc. (NYSE:KMX) is a leading company in the used vehicle retail market in the United States. It offers a wide range of vehicles and related services, making it a significant player in the industry. Analysts closely monitor CarMax's stock, and their consensus price targets provide valuable insights into market expectations.

Over the past year, the consensus price target for CarMax's stock has experienced some changes. Last year, the average price target was approximately $82.67. This figure reflected analysts' expectations for the stock's performance, considering the company's market position and financial health.

In the last quarter, the average price target remained steady at $90. This suggests that analysts maintained a positive outlook on CarMax's potential, possibly due to consistent performance or favorable market conditions. The stability in the price target over the last month, holding at $90, indicates that analysts' expectations have not changed significantly in the short term.

CarMax is preparing to announce its fourth-quarter earnings, with the Zacks Consensus Estimate predicting earnings of 64 cents per share and revenues of $5.97 billion. Analyst Michael Montani from Evercore ISI has set a price target of $105 for CarMax, reflecting a more optimistic view of the company's future prospects.

As CarMax gears up for its earnings report, investors and analysts are closely watching these figures to gauge the company's financial health and future prospects. The increase in the price target from $82.67 a year ago to $90 in recent months suggests growing confidence in CarMax's business model and market prospects.

• RBC Capital upgraded CarMax, Inc. (NYSE:KMX) to "Outperform" with a price target increase from $99 to $103.
• The stock has shown a 10% increase over the past year, with significant volatility in its price range.
• Despite stable gross margins, CarMax faces risks from potential credit losses and high valuation.

CarMax, Inc. (NYSE:KMX) is a leading retailer of used vehicles in the United States. The company operates through two segments: CarMax Sales Operations and CarMax Auto Finance. CarMax Sales Operations is responsible for the sale of used vehicles, while CarMax Auto Finance provides financing solutions to customers. The company competes with other used car retailers like AutoNation and Carvana.

On December 20, 2024, RBC Capital upgraded CarMax's stock to "Outperform," with a price target increase from $99 to $103. At the time, the stock was priced at $84.23. This upgrade suggests confidence in CarMax's future performance, despite the stock being considered overvalued, trading at 23 times earnings, as highlighted by RBC Capital.

CarMax shares have risen by 10% over the past year, with the current price reflecting a 3.45% increase, or $2.81, from the previous day. The stock has fluctuated between $82.99 and $91.25 today, with $91.25 being the highest price in the past year. The lowest price in the past year was $65.83, indicating significant volatility.

Despite stable gross margins and disciplined spending, CarMax faces risks from potential credit losses and high valuation. The company's financing division has tightened credit standards, but concerns remain about existing loan delinquencies and low reserve rates. These factors contribute to the "sell" rating, despite the recent upgrade by RBC Capital.

CarMax's market capitalization stands at approximately $13.05 billion, with a trading volume of 5,311,802 shares today. The company's financial health and market position are crucial for investors to consider, especially given the current valuation and potential risks associated with its financing operations.

CarMax (NYSE:KMX) shares dropped over 6% in pre-market today despite the used vehicle retailer reporting stronger-than-expected revenue for fiscal Q2 2025.

The company posted quarterly earnings per share (EPS) of $0.85, aligning with analyst expectations. Net sales and operating revenue reached $7.01 billion, surpassing the Street estimate of $6.82 billion.

Used vehicle sales totaled $5.68 billion, marking a 1.5% year-over-year increase and beating the projected $5.44 billion. However, wholesale vehicle sales fell 13% year-over-year to $1.15 billion, slightly below the expected $1.2 billion.

CarMax President and CEO Bill Nash highlighted the company's ability to grow retail used unit sales, maintain strong margins, manage SG&A expenses, and achieve double-digit earnings growth, despite challenges from industry-wide auto loan loss pressures.

CarMax (NYSE:KMX) reported a significant drop in first-quarter profit, with a 33% decline due to continued pressure on vehicle margins in the used-vehicle market. The company posted a net income of $152.4 million, or 97 cents per share, for Q1, down from $228.3 million, or $1.44 per share, in the same period last year.

Revenue also fell short of expectations, coming in at $7.11 billion compared to the consensus estimate of $7.2 billion.

CarMax's first-quarter performance was further marked by a 3.1% decline in retail used unit sales and a 3.8% drop in comparable store used unit sales from the previous year. Wholesale units saw an 8.3% decrease compared to the first quarter of the prior year. Despite these declines, gross profit per retail used unit remained steady at $2,347, matching last year's figures, while gross profit per wholesale unit hit a record high of $1,064.