CarMax (NYSE:KMX) Shares Gap Up – Should You Buy?

CarMax, Inc. (NYSE:KMX) shares gapped up before the market opened on Wednesday . The stock had previously closed at $42.14, but opened at $44.80. CarMax shares last traded at $42.8370, with a volume of 1,397,992 shares traded.

Trending Headlines about CarMax

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Starboard has built roughly a $350 million stake and nominated two directors to CarMax’s board, increasing the chance of management changes or faster shareholder‑friendly actions (cost cuts, buybacks). Starboard Builds $350 Million Stake in CarMax, Seeks Board Seats
• Positive Sentiment: Starboard is pushing for a digital sales overhaul and significant cost reductions (reports cite potential ~$300M in savings), which could materially improve margins and free cash flow if implemented effectively. Activist Starboard urges CarMax to overhaul digital sales, cut costs
• Neutral Sentiment: CarMax says engagement with Starboard has been “productive,” which reduces the risk of a public proxy fight but leaves timing and specifics of any changes unclear. That leaves outcomes dependent on negotiations and the board’s receptiveness. CarMax Issues Statement on Engagement With Starboard Value
• Negative Sentiment: Market reaction is mixed—initial gains on activist news have given way to selling as investors worry about execution risk, potential margin compression if CarMax cuts prices to drive volume, and short‑term disruption from board/strategy changes. ‘Our Engagement… Has Been Productive’: CarMax (KMX) Stock Slides on Starboard Push

Analysts Set New Price Targets

Several research firms recently issued reports on KMX. Weiss Ratings reiterated a “sell (d)” rating on shares of CarMax in a report on Friday, January 9th. Benchmark restated a “hold” rating on shares of CarMax in a research report on Tuesday, December 16th. Bank of America lifted their price target on CarMax from $27.00 to $31.00 and gave the stock an “underperform” rating in a research note on Friday, December 19th. Morgan Stanley set a $35.00 price target on CarMax in a research report on Monday, December 8th. Finally, Robert W. Baird increased their price objective on CarMax from $44.00 to $48.00 and gave the company an “outperform” rating in a research note on Wednesday, February 18th. One investment analyst has rated the stock with a Strong Buy rating, one has issued a Buy rating, twelve have issued a Hold rating and five have given a Sell rating to the company. Based on data from MarketBeat.com, the stock has an average rating of “Reduce” and a consensus target price of $39.21.

CarMax Stock Performance

The company has a market cap of $5.81 billion, a PE ratio of 13.53, a PEG ratio of 0.99 and a beta of 1.35. The company has a debt-to-equity ratio of 2.74, a quick ratio of 0.51 and a current ratio of 1.99. The firm’s 50 day moving average is $44.34 and its 200-day moving average is $44.82.

CarMax (NYSE:KMX) last released its earnings results on Thursday, December 18th. The company reported $0.43 earnings per share for the quarter, topping analysts’ consensus estimates of $0.31 by $0.12. The business had revenue of $5.79 billion for the quarter, compared to analyst estimates of $5.66 billion. CarMax had a net margin of 1.77% and a return on equity of 7.72%. The business’s revenue was down 6.9% on a year-over-year basis. During the same period last year, the company posted $0.81 EPS. On average, research analysts anticipate that CarMax, Inc. will post 3.23 earnings per share for the current fiscal year.

Hedge Funds Weigh In On CarMax

A number of institutional investors and hedge funds have recently added to or reduced their stakes in KMX. Huntington National Bank grew its holdings in CarMax by 62.4% in the 4th quarter. Huntington National Bank now owns 690 shares of the company’s stock valued at $27,000 after buying an additional 265 shares in the last quarter. CYBER HORNET ETFs LLC purchased a new position in shares of CarMax during the 2nd quarter worth $28,000. MUFG Securities EMEA plc acquired a new position in shares of CarMax during the 2nd quarter valued at about $30,000. Center for Financial Planning Inc. acquired a new position in shares of CarMax during the 3rd quarter valued at about $31,000. Finally, Advisory Services Network LLC purchased a new stake in shares of CarMax in the third quarter valued at about $32,000.

CarMax Company Profile

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.