CarMax (KMX) Financials

CarMax (KMX) has shown a mix of margin stability and liquidity support from financing activity, even as quarterly profitability has fluctuated in the 2024–2026 period. Here are the most notable takeaways based on the last four years of quarterly statements.

• Solid near-term liquidity: In the latest quarterly balance sheet (Q3 2026), current assets were about $4.20 billion with current liabilities around $2.11 billion, yielding a current ratio near 2.0, indicating a healthy ability to cover short-term obligations.
• Financing activity supports cash position: In Q4 2026, Net Cash From Financing Activities was about $633 million, helping lift the net change in cash to a positive $151 million despite ongoing negative cash flow from operations.
• Positive quarterly earnings in several quarters: CarMax demonstrated profitability in multiple recent quarters, including Q2 2026 net income of about $95.4 million (diluted EPS $0.64) and Q1 2026 net income of about $210.4 million (EPS $1.38), suggesting periods of solid profitability alongside tougher quarters.
• Gross margin generally around 10–11%: Across recent quarters, gross margin has been in the low teens (roughly 10–11%), indicating a consistent gross profitability framework even as operating expenses swing with volume and mix.

• Revenue shows cyclicality and fluctuation: Recent quarters illustrate variability (e.g., Q3 2025 revenue around $6.223 billion vs. Q4 2026 around $5.946 billion), highlighting sensitivity to demand and channel mix over time.
• Leverage remains notable: Total liabilities (~$19.5 billion in many quarters) versus equity (~$6.0 billion) gives a debt-to-equity ratio around 3.2, indicating meaningful leverage that heights risk if cash flows deteriorate.
• Inventories and asset base are large: Inventories typically run in the $3.0–3.3 billion range, and noncurrent assets are heavily weighted (e.g., large noncurrent note & lease receivables), which can impact working capital dynamics and depreciation schedules.

• Recent quarter profitability deteriorated: In Q4 2026, Net Income attributable to common shareholders was -$106.6 million and Total Operating Income was -$219.1 million, signaling a meaningful quarterly earnings gap versus prior periods.
• Operating cash flow turned negative in the latest quarter: Net cash from continuing operating activities in Q4 2026 was -$353.3 million, indicating higher cash burn from ongoing operations in that period.
• Significant reliance on external financing to fund activity: The strong cash inflow from financing offset weaker CFO, underscoring vulnerability to funding conditions if financing markets tighten or if volumes deteriorate further.