CarMax (NYSE:KMX) Shares Down 4.2% - What's Next?

Key Points

• CarMax shares fell about 4.2% to $56.76 in mid-day trading, with volume 77% below the average session level.
• Despite the decline, fiscal Q2 results substantially exceeded expectations: EPS was $1.16 versus $0.73 expected, while revenue rose 19.5% year over year to $7.88 billion. Retail used-vehicle sales and comparable-store sales also grew strongly.
• Management expects potential share repurchases to resume in the third quarter and is targeting $200 million in annualized cost savings by fiscal 2027. However, analyst sentiment remains cautious, with an average “Reduce” rating and a consensus price target of $56.71.

CarMax, Inc. (NYSE:KMX - Get Free Report)'s share price traded down 4.2% during mid-day trading on Wednesday. The company traded as low as $56.25 and last traded at $56.7640. 720,608 shares traded hands during mid-day trading, a decline of 77% from the average session volume of 3,151,084 shares. The stock had previously closed at $59.23.

Key CarMax News

Here are the key news stories impacting CarMax this week:

• Positive Sentiment: Results significantly exceeded expectations. Fiscal Q2 EPS was $1.16, versus the roughly $0.73 consensus, while revenue rose 19.5% year over year to $7.88 billion, beating estimates by approximately $850 million. CarMax Q2 Earnings Beat Estimates on Strong Unit Sales, CAF Growth
• Positive Sentiment: Sales momentum and financing helped. Retail used-vehicle unit sales increased 13.8%, comparable-store sales rose 13.0%, and combined retail and wholesale unit volume climbed 14.7%. Growth in CarMax Auto Finance, pricing initiatives and cost controls supported earnings. CarMax Reports Second Quarter Fiscal 2027 Results
• Positive Sentiment: Capital returns and restructuring could provide additional support. Management signaled that share repurchases could resume in the third quarter and is targeting $200 million in annualized cost savings by the end of fiscal 2027. CarMax Signals Resumption of Share Repurchases
• Positive Sentiment: Robert W. Baird raised its price target from $64 to $70 and maintained an Outperform rating, indicating confidence in the turnaround.

Analyst Upgrades and Downgrades

A number of equities research analysts have commented on KMX shares. Zacks Research lowered shares of CarMax from a "strong-buy" rating to a "hold" rating in a report on Wednesday, September 16th. Barclays set a $67.00 target price on shares of CarMax in a research note on Wednesday. Truist Financial upped their target price on shares of CarMax from $50.00 to $60.00 and gave the stock a "hold" rating in a research report on Wednesday. UBS Group reissued a "neutral" rating and set a $62.00 price target on shares of CarMax in a research note on Wednesday. Finally, Bank of America increased their price target on shares of CarMax from $45.00 to $50.00 and gave the company an "underperform" rating in a research note on Wednesday. Two equities research analysts have rated the stock with a Buy rating, thirteen have given a Hold rating and four have issued a Sell rating to the company's stock. Based on data from MarketBeat, the stock has an average rating of "Reduce" and an average target price of $56.71.

CarMax Stock Down 4.7%

The firm has a 50 day moving average price of $59.56 and a 200-day moving average price of $50.20. The firm has a market cap of $8.01 billion, a price-to-earnings ratio of 36.92, a price-to-earnings-growth ratio of 1.80 and a beta of 1.17. The company has a debt-to-equity ratio of 2.87, a current ratio of 2.70 and a quick ratio of 0.82.

CarMax (NYSE:KMX - Get Free Report) last announced its quarterly earnings data on Tuesday, September 29th. The company reported $1.16 EPS for the quarter, topping analysts' consensus estimates of $0.73 by $0.43. The firm had revenue of $7.88 billion during the quarter, compared to analyst estimates of $7.09 billion. CarMax had a return on equity of 6.64% and a net margin of 0.84%.The company's revenue was up 19.5% on a year-over-year basis. During the same period last year, the company earned $0.64 earnings per share. As a group, equities analysts predict that CarMax, Inc. will post 2.73 EPS for the current fiscal year.

Institutional Inflows and Outflows

Hedge funds have recently modified their holdings of the business. Global Retirement Partners LLC bought a new position in shares of CarMax in the 2nd quarter worth $29,000. Basecamp Wealth Advisors LLC grew its stake in shares of CarMax by 105.8% during the first quarter. Basecamp Wealth Advisors LLC now owns 636 shares of the company's stock worth $26,000 after purchasing an additional 327 shares during the period. Huntington National Bank increased its holdings in CarMax by 62.4% in the fourth quarter. Huntington National Bank now owns 690 shares of the company's stock valued at $27,000 after purchasing an additional 265 shares during the last quarter. Anchor Investment Management LLC bought a new stake in CarMax in the second quarter valued at about $37,000. Finally, Wellington Grp LLC lifted its stake in CarMax by 6,500.0% in the first quarter. Wellington Grp LLC now owns 726 shares of the company's stock valued at $30,000 after buying an additional 715 shares during the period.

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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