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Key Stats for CarMax Stock
- Price Change for CarMax stock: 7%
- Current Share Price: $69
- 52-Week High: $91
- KMX Stock Price Target: $84
What Happened?
CarMax (KMX) stock jumped 6.6% on Friday, following a strong first-quarter earnings beat that demonstrated the company’s improving operational momentum and market share gains.
The used car retailer delivered its fourth consecutive quarter of positive retail comparable sales growth while outperforming analyst expectations on both earnings and revenue.
CarMax reported earnings of $1.38 per share, crushing analyst estimates of $1.18 per share by 17%. This represented a 42.3% increase from the $0.97 per share earned in the prior year quarter.
Revenue of $7.55 billion also topped expectations of $7.53 billion, driven by strong unit volume growth across both retail and wholesale segments.
CarMax’s retail used vehicle unit sales increased 9.0% year-over-year to 230,210 units, with comparable store sales growing 8.1%.
It achieved a record-high gross profit per retail used unit of $2,407, up $60 from the prior year, reflecting operational efficiencies in logistics and reconditioning operations as well as strong demand dynamics.
See CarMax’s full analyst estimates, earnings results, and earnings transcript (It’s free) >>>
CEO Bill Nash attributed the strong performance to the company’s “best-in-class omnichannel experience” and emphasized that results highlight “the strength of our earnings growth model.”
CarMax’s digital capabilities supported 80% of retail unit sales, with 66% through omnichannel and 14% through online-only transactions.
CarMax also demonstrated operational leverage, with SG&A expenses as a percentage of gross profit improving by 680 basis points to 73.8%, driven by volume growth and ongoing cost management initiatives.
It accelerated share buybacks, repurchasing $199.8 million of stock during the quarter.
Based on analyst estimates, CarMax stock appears undervalued, with a projected total return of +31.2% over the next 2.7 years, or about 10.6% annually. This suggests CarMax could see meaningful upside if the used car market continues to recover and the company successfully boosts profitability through improved inventory management and stronger digital execution.
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What the Market Is Telling Us About KMX Stock
The 6.6% surge in KMX stock reflects investor enthusiasm about CarMax’s ability to execute its omnichannel strategy while driving sustainable earnings growth.
The company’s fourth consecutive quarter of positive comparable sales validates management’s investments in digital capabilities and suggests market share gains in the fragmented used car market.
CarMax’s record retail gross profit per unit demonstrates pricing power and operational efficiency improvements, particularly in logistics and reconditioning operations. The expansion of standalone reconditioning centers and enhanced inventory management systems is yielding tangible benefits, allowing CarMax to either maintain margins or strategically direct savings to the bottom line.
The strong performance comes amid a cautious consumer environment, with management noting some impact from tariff speculation and economic uncertainty. However, CEO Nash emphasized that the business was performing well even before tariff-related buying activity, suggesting underlying strength in CarMax’s value proposition and execution.
CarMax Auto Finance reported mixed results, with income declining 3.6% due to higher loan loss provisions. However, the business expanded its non-prime funding program to support growth while mitigating risk.
The new off-balance-sheet funding strategy for subprime loans offers flexibility to expand market share across the full credit spectrum while managing risk exposure.
CarMax’s AI-driven operational improvements are yielding measurable results, with virtual assistant containment rates improving by 30% and customer experience consultant productivity increasing by 24%. These efficiency gains support management’s confidence in achieving “omni cost neutrality” for the first time in fiscal 2026.
Looking Ahead
CarMax appears well-positioned to continue gaining market share through its differentiated omnichannel experience.
The upcoming marketing campaign focusing on customer optionality and the “don’t settle” message could further accelerate customer acquisition.
With strong operational momentum, improving efficiency metrics, and a large addressable market, CarMax’s earnings growth model appears increasingly validated.
For investors, the strong quarter reinforces CarMax’s positioning as a consolidator in the fragmented used car market, with sustainable competitive advantages through technology, scale, and customer experience differentiation.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
