CarMax (NYSE:KMX) Shares Gap Up Following Strong Earnings

CarMax, Inc. (NYSE:KMX) gapped up before the market opened on Tuesday following a stronger than expected earnings report. The stock had previously closed at $56.55, but opened at $60.41. CarMax shares last traded at $62.1920, with a volume of 2,828,344 shares changing hands.

The company reported $1.16 earnings per share for the quarter, beating analysts’ consensus estimates of $0.73 by $0.43. The business had revenue of $7.88 billion for the quarter, compared to analysts’ expectations of $7.09 billion. CarMax had a net margin of 0.84% and a return on equity of 6.64%.

Trending Headlines about CarMax

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Strong earnings and revenue beat: Adjusted diluted EPS rose 81.3% year over year to $1.16, versus estimates ranging from $0.68 to $0.73. Revenue increased 19.5% to $7.88 billion, exceeding expectations by roughly $800 million, while net earnings reached $165.3 million. CarMax Reports Second Quarter Fiscal 2027 Results
• Positive Sentiment: Higher vehicle volume supported results: Combined retail and wholesale unit sales rose 14.7% to 387,735, with retail used-vehicle sales up 13.8% and comparable-store sales up 13.0%. The strong performance suggests improved demand and greater customer traffic. CarMax earnings surge as used vehicle sales jump
• Positive Sentiment: Capital returns may resume: Management indicated that share buybacks are expected to restart, offering additional support for earnings per share and investor sentiment. CarMax earnings and buybacks
• Neutral Sentiment: Strategic and leadership changes: CarMax appointed a chief digital and customer officer and another senior leader as part of its “Shift into GEAR” growth strategy, aimed at unifying the customer experience and supporting long-term expansion. CarMax Announces Leadership Appointments
• Negative Sentiment: Profitability and earnings quality remain watchpoints: Retail gross profit per vehicle declined $111 to $2,105 as pricing actions supported sales growth. Some analysts also questioned whether one-time finance-related benefits contributed to the earnings beat, creating uncertainty about how much of the improvement is sustainable. CarMax earnings analysis

Analyst Upgrades and Downgrades

KMX has been the subject of several recent analyst reports. Stephens increased their price objective on shares of CarMax from $66.00 to $74.00 and gave the company an “overweight” rating in a report on Friday. Bank of America upped their target price on CarMax from $40.00 to $45.00 and gave the stock an “underperform” rating in a research report on Wednesday, June 17th. JPMorgan Chase & Co. lifted their price target on CarMax from $60.00 to $70.00 and gave the company a “neutral” rating in a research report on Friday, September 18th. Morgan Stanley boosted their price objective on CarMax from $44.00 to $47.00 and gave the stock a “cautious” rating in a research note on Wednesday, September 23rd. Finally, Barclays upgraded CarMax from an “underweight” rating to an “equal weight” rating and upped their price objective for the company from $37.00 to $61.00 in a report on Tuesday, July 21st. Two analysts have rated the stock with a Buy rating, thirteen have issued a Hold rating and three have issued a Sell rating to the stock. Based on data from MarketBeat.com, the company has a consensus rating of “Reduce” and an average price target of $53.15.

Hedge Funds Weigh In On CarMax

A number of hedge funds and other institutional investors have recently added to or reduced their stakes in KMX. Basecamp Wealth Advisors LLC boosted its position in shares of CarMax by 105.8% in the first quarter. Basecamp Wealth Advisors LLC now owns 636 shares of the company’s stock worth $26,000 after buying an additional 327 shares during the period. Huntington National Bank raised its position in CarMax by 62.4% during the fourth quarter. Huntington National Bank now owns 690 shares of the company’s stock valued at $27,000 after buying an additional 265 shares during the period. Global Retirement Partners LLC purchased a new stake in CarMax in the 2nd quarter worth about $29,000. Wellington Grp LLC boosted its position in CarMax by 6,500.0% during the 1st quarter. Wellington Grp LLC now owns 726 shares of the company’s stock worth $30,000 after acquiring an additional 715 shares during the period. Finally, Commonwealth Retirement Investments LLC purchased a new position in CarMax during the 4th quarter valued at about $33,000.

CarMax Stock Up 8.7%

The business’s 50-day moving average price is $59.52 and its 200-day moving average price is $50.08. The company has a quick ratio of 0.82, a current ratio of 2.70 and a debt-to-equity ratio of 2.87. The firm has a market capitalization of $8.72 billion, a PE ratio of 40.59, a price-to-earnings-growth ratio of 2.62 and a beta of 1.17.

About CarMax

CarMax, Inc is a specialty retailer of used vehicles and one of the largest automotive retailers in the United States. The company sells a broad selection of used cars, trucks and sport utility vehicles through its retail locations and online platform. CarMax also purchases vehicles from consumers and other sources, providing customers with a streamlined alternative to traditional private-party sales.

In addition to retail sales, CarMax operates wholesale vehicle auctions for vehicles that do not meet its retail standards or business requirements.