CarMax (NYSE:KMX) Issues Quarterly Earnings Results, Beats Estimates By $0.43 EPS

CarMax (NYSE:KMX) announced its quarterly earnings data on Tuesday. The company reported $1.16 earnings per share for the quarter, beating analysts’ consensus estimates of $0.73 by $0.43, FiscalAI reports. CarMax had a return on equity of 6.64% and a net margin of 0.84%.The company had revenue of $7.88 billion for the quarter, compared to analyst estimates of $7.09 billion.

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

• Strong second-quarter performance: Used unit comps rose 13%, total vehicle sales increased 15%, and EPS grew 81% year over year to $1.16, supported by stronger volume, EPP profitability, CAF income, and SG&A leverage.
• CarMax said sharper pricing, reconditioning efficiencies, improved pricing algorithms, digital enhancements, and industry-wide FTC fee transparency helped drive sales; management expects continued momentum and plans to resume share repurchases at a modest pace in the third quarter.
• The redesigned Extended Protection Plan and new wheel, tire, and dent offering lifted EPP margin by $46 per unit in the quarter, while management remains on track for approximately $35 of full-year incremental EPP margin per unit.
• Management expects fiscal 2027 retail gross profit per unit to decline by less than the previously projected $200, but still anticipates year-over-year GPU declines in both the third and fourth quarters as it balances pricing competitiveness with demand and margins.
• CAF income is expected to be slightly below fiscal 2026 despite plans to originate nearly $1 billion in Tier 2 loans, and the company expects roughly $50 million of non-cash, non-recurring pension settlement charges, split between the third and fourth quarters.

CarMax Stock Up 4.8%

Shares of KMX opened at $59.29 on Wednesday. CarMax has a 52-week low of $30.26 and a 52-week high of $65.28. 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 stock has a fifty day simple moving average of $59.56 and a two-hundred day simple moving average of $50.20. The company has a market capitalization of $8.41 billion, a PE ratio of 38.75, a price-to-earnings-growth ratio of 1.80 and a beta of 1.17.

CarMax News Roundup

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Strong earnings and revenue beat: CarMax reported adjusted earnings of $1.16 per share, versus the roughly $0.73 consensus estimate and $0.64 a year earlier. Revenue rose 19.5% to $7.88 billion, exceeding expectations by approximately $850 million. CarMax Reports Second Quarter Fiscal 2027 Results
• Positive Sentiment: Used-vehicle demand improved: Combined retail and wholesale unit sales increased 14.7%, while retail used-unit sales rose 13.8% and comparable-store used-unit sales climbed 13.0%. Management said pricing actions helped support sales, and even lower-income customers appeared relatively resilient despite affordability pressures. CarMax Says Even Its Lowest-Income Customers Are Holding Up
• Positive Sentiment: Capital returns may resume: CarMax indicated that share repurchases are expected to restart in the third quarter, providing an additional potential catalyst for the stock. CarMax Just Gave Investors a Better Reason to Believe in the Turnaround

Wall Street Analysts Forecast Growth

A number of equities research analysts have recently commented on KMX shares. Stephens increased their target price on shares of CarMax from $66.00 to $74.00 and gave the company an “overweight” rating in a research report on Friday, September 25th. Benchmark restated a “hold” rating on shares of CarMax in a research report on Thursday, June 18th. Wall Street Zen raised shares of CarMax from a “sell” rating to a “hold” rating in a research note on Saturday, June 13th. UBS Group set a $60.00 price objective on shares of CarMax in a research note on Wednesday, July 29th. Finally, Royal Bank Of Canada increased their price objective on shares of CarMax from $41.00 to $45.00 and gave the company a “sector perform” rating in a report on Thursday, June 18th. Two investment analysts have rated the stock with a Buy rating, thirteen have given a Hold rating and four have assigned a Sell rating to the company. Based on data from MarketBeat, the company presently has an average rating of “Reduce” and a consensus price target of $53.14.

About CarMax

CarMax, Inc is a retailer of used vehicles operating in the United States. The company sells a broad selection of used cars, trucks and SUVs through its dealership network and online platform, offering customers the ability to research, purchase and arrange delivery for vehicles through an omnichannel shopping experience.

In addition to retail vehicle sales, CarMax provides vehicle financing through CarMax Auto Finance and offers customers access to extended protection products and related services.