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

CarMax, Inc. (NYSE:KMX) gapped up prior to trading 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.

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

Key CarMax News

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 research reports. Royal Bank Of Canada boosted their target price on shares of CarMax from $41.00 to $45.00 and gave the stock a “sector perform” rating in a research report on Thursday, June 18th. Truist Financial raised their price target on shares of CarMax from $47.00 to $50.00 and gave the company a “hold” rating in a report on Thursday, June 18th. Mizuho upped their price objective on shares of CarMax from $38.00 to $43.00 and gave the stock a “neutral” rating in a report on Thursday, June 18th. Benchmark reaffirmed a “hold” rating on shares of CarMax in a research report on Thursday, June 18th. Finally, JPMorgan Chase & Co. upped their price target on CarMax from $60.00 to $70.00 and gave the stock a “neutral” rating in a research note on Friday, September 18th. Two research analysts have rated the stock with a Buy rating, thirteen have assigned a Hold rating and three have issued a Sell rating to the stock. According to MarketBeat, CarMax currently has a consensus rating of “Reduce” and a consensus target price of $53.15.

Institutional Inflows and Outflows

Institutional investors have recently added to or reduced their stakes in the business. Envestnet Asset Management Inc. grew its position in CarMax by 1.6% during the second quarter. Envestnet Asset Management Inc. now owns 932,805 shares of the company’s stock worth $49,336,000 after buying an additional 14,976 shares in the last quarter. State Street Corp grew its holdings in shares of CarMax by 5.6% during the 2nd quarter. State Street Corp now owns 5,156,276 shares of the company’s stock worth $272,715,000 after purchasing an additional 271,216 shares in the last quarter. Anchor Investment Management LLC bought a new stake in shares of CarMax during the second quarter valued at approximately $37,000. The Manufacturers Life Insurance Company increased its position in shares of CarMax by 0.9% during the second quarter. The Manufacturers Life Insurance Company now owns 2,420,139 shares of the company’s stock valued at $128,001,000 after purchasing an additional 21,882 shares during the period. Finally, Capstone Financial Advisors Inc. increased its position in shares of CarMax by 5.6% during the second quarter. Capstone Financial Advisors Inc. now owns 9,500 shares of the company’s stock valued at $502,000 after purchasing an additional 500 shares during the period.

CarMax Stock Up 8.7%

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

CarMax Company Profile

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.