Zacks Research Upgrades CarMax (NYSE:KMX) to "Strong-Buy"

Key Points

• Zacks Research upgraded CarMax to “Strong Buy” from “Hold” and raised its long-term earnings outlook, projecting EPS of $3.39 for fiscal 2027, $3.68 for fiscal 2028 and $4.25 for fiscal 2029.
• CarMax recently reported strong quarterly results, with EPS of $1.16 versus the $0.73 consensus estimate and revenue of $7.88 billion, up 19.5% year over year.
• Despite upgrades from Zacks and Bank of America, broader analyst sentiment remains cautious: CarMax has a consensus “Hold” rating and an average price target of $57.85, compared with a recent share price of $53.29.

CarMax (NYSE:KMX - Get Free Report) was upgraded by analysts at Zacks Research from a "hold" rating to a "strong-buy" rating in a research note issued to investors on Thursday, Zacks reports. Zacks Research also issued estimates for CarMax's Q3 2027 earnings at $0.44 EPS, Q4 2027 earnings at $0.49 EPS, FY2027 earnings at $3.39 EPS, Q1 2028 earnings at $1.21 EPS, Q2 2028 earnings at $1.08 EPS, Q3 2028 earnings at $0.87 EPS, Q4 2028 earnings at $0.52 EPS, FY2028 earnings at $3.68 EPS, Q1 2029 earnings at $1.10 EPS, Q2 2029 earnings at $1.16 EPS and FY2029 earnings at $4.25 EPS.

Several other equities research analysts have also recently issued reports on the company. Stephens lifted their price objective on CarMax from $66.00 to $74.00 and gave the stock an "overweight" rating in a report on Friday, September 25th. Benchmark reiterated a "hold" rating on shares of CarMax in a research note on Thursday, June 18th. UBS Group set a $65.00 target price on CarMax in a report on Thursday. Bank of America raised CarMax from an "underperform" rating to a "buy" rating and increased their target price for the company from $50.00 to $65.00 in a report on Thursday. Finally, Truist Financial raised their target price on CarMax from $50.00 to $60.00 and gave the company a "hold" rating in a research report on Wednesday, September 30th. One analyst has rated the stock with a Strong Buy rating, three have given a Buy rating, thirteen have issued a Hold rating and two have issued a Sell rating to the company. According to data from MarketBeat, CarMax currently has a consensus rating of "Hold" and a consensus price target of $57.85.

CarMax Price Performance

KMX traded up $0.67 during midday trading on Thursday, hitting $53.29. 2,304,625 shares of the company traded hands, compared to its average volume of 3,952,594. The company has a current ratio of 2.33, a quick ratio of 0.57 and a debt-to-equity ratio of 2.66. The company has a market capitalization of $7.56 billion, a price-to-earnings ratio of 26.00, a PEG ratio of 1.48 and a beta of 1.23. CarMax has a 52-week low of $30.26 and a 52-week high of $65.28. The business has a 50 day simple moving average of $58.32 and a two-hundred day simple moving average of $51.18.

CarMax (NYSE:KMX - Get Free Report) last announced its earnings results on Tuesday, September 29th. The company reported $1.16 earnings per share (EPS) for the quarter, beating the consensus estimate of $0.73 by $0.43. CarMax had a net margin of 1.06% and a return on equity of 7.76%. The business had revenue of $7.88 billion for the quarter, compared to analyst estimates of $7.09 billion. During the same quarter last year, the business earned $0.64 earnings per share. The company's revenue for the quarter was up 19.5% compared to the same quarter last year. On average, equities analysts forecast that CarMax will post 3.10 earnings per share for the current fiscal year.

Institutional Inflows and Outflows

Institutional investors have recently bought and sold shares of the business. State Street Corp grew its position in shares of CarMax by 5.6% in the second quarter. State Street Corp now owns 5,156,276 shares of the company's stock valued at $272,715,000 after purchasing an additional 271,216 shares in the last quarter. Jupiter Topco LLC purchased a new position in CarMax during the second quarter worth approximately $245,676,000. Primecap Management Co. CA acquired a new position in CarMax during the second quarter worth $230,548,000. Janus Henderson Group PLC boosted its stake in CarMax by 1.1% during the first quarter. Janus Henderson Group PLC now owns 4,580,807 shares of the company's stock worth $190,471,000 after buying an additional 49,987 shares during the last quarter. Finally, Dimensional Fund Advisors LP boosted its stake in CarMax by 7.3% during the first quarter. Dimensional Fund Advisors LP now owns 4,275,663 shares of the company's stock worth $177,767,000 after buying an additional 289,768 shares during the last quarter.

Key Stories Impacting CarMax

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Bank of America upgraded CarMax to Buy from Underperform and raised its price target to $65 from $50. The firm cited CarMax’s improved price competitiveness, cost reductions and expected market-share gains. It also believes enforcement of the Federal Trade Commission’s price-transparency rules could provide a lasting sales benefit. BofA Securities Upgrades CarMax to Buy From Underperform, Adjusts Price Target to $65 From $50
• Positive Sentiment: Zacks upgraded KMX to Rank #1, or Strong Buy, reflecting increased optimism about the company’s earnings outlook. CarMax was also included on Zacks’ list of top value stocks, which may attract additional value-oriented interest. CarMax Upgraded to Strong Buy: Here's Why
• Positive Sentiment: Zacks Research raised numerous CarMax earnings forecasts, including estimates for fiscal 2027, fiscal 2028 and fiscal 2029. Its FY2029 EPS projection increased to $4.25 from $2.91, while FY2027 and FY2028 estimates rose to $3.39 and $3.68, respectively. These revisions reinforce expectations for improving profitability. CarMax Earnings Estimate Revisions
• Neutral Sentiment: Recent analysis compares CarMax with Genuine Parts and other retail-wholesale companies on valuation and year-to-date performance. The coverage may influence how investors assess KMX’s relative value, but it does not represent a new company operating update. KMX vs. GPC: Which Stock Is the Better Value Option?
• Negative Sentiment: CarMax had recently fallen sharply, losing 15.3% over four weeks before the latest rebound. Although technical indicators showed the stock as oversold and earnings revisions suggested a potential reversal, the decline highlights continued volatility and investor sensitivity to the company’s outlook. CarMax Loses 15.3% in 4 Weeks

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.

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