CarMax (NYSE:KMX) Posts Earnings Results, Beats Estimates By $0.12 EPS

CarMax (NYSE:KMX) issued its quarterly earnings results on Tuesday. The company reported $0.34 EPS for the quarter, topping the consensus estimate of $0.22 by $0.12, Briefing.com reports. CarMax had a net margin of 1.77% and a return on equity of 7.72%. The firm had revenue of $5.95 billion for the quarter, compared to analysts’ expectations of $5.65 billion. During the same period in the previous year, the business earned $0.58 earnings per share. CarMax’s revenue for the quarter was down 1.0% compared to the same quarter last year.

Here are the key takeaways from CarMax’s conference call:

• Keith Barr was named CEO, bringing hospitality-led digital and customer-first experience priorities (omnichannel, AI/tech, urgency) that management says will drive a turnaround and long-term growth.
• Q4 results showed weakening profitability — adjusted EPS $0.34 (vs. $0.64 prior year) and a GAAP loss driven by a $0.99 non‑cash goodwill impairment and restructuring charges that together reduced EPS by ~$1.19; total gross profit fell 9% year‑over‑year.
• Management cut prices, increased acquisition marketing and digital enhancements, which improved sales trends versus prior quarters, but expects FY‑2027 used margins to decline roughly in line with Q4 (with Q1 down as much as ~$300/unit) while rolling out an EPP redesign expected to add ≈$35/unit.
• Company reiterated cost focus with an increased target of $200 million FY‑2027 exit‑rate SG&A reductions (full annualization expected in FY‑2028), reduced FY‑2027 CapEx to about $400 million, and has paused share repurchases to manage leverage despite keeping the buyback authorization in place.
• CarMax Auto Finance originated ~$1.9 billion in Q4 (penetration 42.8%) and is expanding into the top half of Tier‑2 to retain more finance income; CAF income was down 10% to $144M and reserves ended at $453M (2.78%), with a $100M non‑prime pool designated held‑for‑sale.

CarMax Stock Performance

CarMax stock traded down $0.59 during trading hours on Wednesday, reaching $41.07. 533,539 shares of the company were exchanged, compared to its average volume of 3,495,992. The company has a current ratio of 1.99, a quick ratio of 0.51 and a debt-to-equity ratio of 2.74. CarMax has a 12 month low of $30.26 and a 12 month high of $71.99. The stock has a 50-day moving average of $43.00 and a 200 day moving average of $41.98. The firm has a market cap of $5.82 billion, a price-to-earnings ratio of 13.50, a PEG ratio of 1.29 and a beta of 1.30.

Institutional Investors Weigh In On CarMax

Several hedge funds and other institutional investors have recently modified their holdings of KMX. CYBER HORNET ETFs LLC bought a new stake in shares of CarMax in the second quarter valued at about $28,000. MUFG Securities EMEA plc bought a new position in CarMax in the second quarter worth $30,000. Advisory Services Network LLC bought a new position in CarMax in the third quarter worth $32,000. UMB Bank n.a. lifted its position in CarMax by 336.6% in the fourth quarter. UMB Bank n.a. now owns 2,074 shares of the company’s stock worth $80,000 after purchasing an additional 1,599 shares during the period. Finally, Parallel Advisors LLC lifted its position in CarMax by 390.9% in the fourth quarter. Parallel Advisors LLC now owns 2,165 shares of the company’s stock worth $84,000 after purchasing an additional 1,724 shares during the period.

Wall Street Analysts Forecast Growth

Several research analysts have issued reports on the stock. Evercore set a $45.00 price target on CarMax in a research note on Friday. Robert W. Baird lifted their price target on CarMax from $44.00 to $48.00 and gave the stock an “outperform” rating in a research note on Wednesday, February 18th. Zacks Research upgraded shares of CarMax from a “strong sell” rating to a “hold” rating in a research report on Monday, January 5th. Stephens lifted their price objective on shares of CarMax from $39.00 to $43.00 and gave the stock an “equal weight” rating in a research report on Thursday, April 2nd. Finally, Barclays lifted their price objective on shares of CarMax from $24.00 to $28.00 and gave the stock an “underweight” rating in a research report on Wednesday, January 21st. One research analyst has rated the stock with a Buy rating, twelve have given a Hold rating and five have given a Sell rating to the company’s stock. According to MarketBeat, the company presently has an average rating of “Reduce” and a consensus target price of $40.86.

Key Stories Impacting CarMax

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Adjusted Q4 results beat consensus — CarMax reported adjusted EPS of $0.34 and revenue of $5.95B, topping Street estimates and showing demand that still supports topline. CarMax Press Release
• Positive Sentiment: New CEO + strategic tech focus — Management highlighted a new CEO (Keith Barr) and a push to invest in technology to streamline the buying/selling experience, which could improve customer acquisition and margins over time if execution succeeds. CarMax Bets on Tech to Streamline Used Car Buying Journey
• Neutral Sentiment: Full materials/transcript available for due diligence — The earnings slide deck and call transcript are published for investors to review management’s detail on unit trends, margins and reserve methodology. Earnings Call Transcript
• Negative Sentiment: Price cuts have compressed vehicle margins — Management implemented price reductions to stimulate demand; gross profit per retail used unit declined materially, weighing on profitability and investor confidence. CarMax posts quarterly loss on goodwill charge, weak used-car demand
• Negative Sentiment: GAAP loss and one-time charges highlighted near-term weakness — The quarter included a goodwill impairment that produced a GAAP loss despite positive adjusted results, increasing uncertainty about asset valuations and near-term earnings. CarMax (KMX) Stock Plunges 13% on Quarterly Loss and Margin Erosion
• Negative Sentiment: Credit provisioning and finance-segment pressure — Higher provisions for loan losses were flagged as a near-term drag on results, which amplifies earnings volatility while reserves are rebuilt. QuiverQuant Analysis
• Negative Sentiment: Analyst downgrades and a new sell initiation increase downside pressure — Bank of America initiated a Sell citing margin compression and demand headwinds; other firms reiterated cautious or underweight views and lowered targets, amplifying selling. BofA Sell Rating

About CarMax

CarMax (NYSE: KMX) is a leading retailer of used vehicles in the United States, offering customers a streamlined, no-haggle purchasing experience. The company’s inventory spans a broad range of makes and models, each of which undergoes a comprehensive inspection process before being offered for sale. Customers can shop in person at CarMax’s retail locations or browse the company’s online platform, which provides detailed vehicle histories, virtual tours and contactless purchasing options.

Originally launched in 1993 as a division of Circuit City, CarMax became an independent, publicly traded company in 1997.