CarMax (KMX) AI Stock Analysis

• Market Cap: $6.82B
• Dividend Yield: N/A
• Average Volume (3M): 4.42M
• Price to Earnings (P/E): 13.6
• Beta (1Y): 0.90
• Revenue Growth: 2.17%
• EPS Growth: 28.59%
• Country: US
• Employees: 30,048
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Auto - Dealerships
• EPS (TTM): 0.64
• Shares Outstanding: 146,845,050
• 10 Day Avg. Volume: 7,832,186
• 30 Day Avg. Volume: 4,420,663
• PEG Ratio: 4.11
• Price to Book (P/B): 2.06
• Price to Sales (P/S): 0.49
• P/FCF Ratio: 82.35
• Enterprise Value/Market Cap: 4.01
• Enterprise Value/Revenue: 1.04
• Enterprise Value/Gross Profit: 9.25
• Enterprise Value/Ebitda: 21.39
• 1Y Price Target: $59.23
• Price Target Upside: 27.60% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 16

• Rating: 56 Neutral
• Price Target: $47.00 ▲(1.25% Upside)

CarMax's overall stock score is driven by stable financial performance and reasonable valuation, but is significantly impacted by bearish technical indicators and challenges highlighted in the earnings call. The company's high leverage and declining sales are key concerns, while strategic initiatives offer some optimism for future growth.

Positive Factors

Cash Flow Generation

Strong cash flow generation indicates CarMax's ability to fund operations and growth initiatives internally, enhancing financial stability.

SG&A Reductions Initiative

Reducing SG&A expenses will improve operational efficiency and profitability, supporting long-term financial health and competitive positioning.

Omnichannel Experience

The focus on omnichannel experience enhances customer engagement and loyalty, potentially driving sales growth and market share.

Negative Factors

High Leverage

High leverage can limit financial flexibility and increase risk, potentially impacting CarMax's ability to invest in growth and weather downturns.

Declining Sales

Declining sales indicate potential market challenges and reduced demand, which could pressure margins and growth prospects if not addressed.

Inventory and Demand Mismatch

Inventory mismatches can lead to increased holding costs and price pressures, affecting profitability and operational efficiency.

CarMax Business Overview & Revenue Model

Company Description

CarMax, Inc., together with its subsidiaries, operates as a retailer of used vehicles in the United States. The company operates through two segments, CarMax Sales Operations and CarMax Auto Finance. It offers customers a range of makes and models of used vehicles, including domestic, imported, and luxury vehicles, as well as hybrid and electric vehicles; and extended protection plans to customers at the time of sale, as well as sells vehicles that are approximately 10 years old and has more than 100,000 miles through wholesale auctions. The company also provides reconditioning and vehicle repair services; and financing alternatives for retail customers across a range of credit spectrum through its CarMax Auto Finance and arrangements with various financial institutions. As of February 28, 2022, it operated approximately 230 used car stores. CarMax, Inc. was founded in 1993 and is based in Richmond, Virginia.

How the Company Makes Money

CarMax generates revenue primarily through the sale of used vehicles, which constitutes its main revenue stream. The company purchases cars from various sources, including auctions and trade-ins, and then sells them to customers at a markup. In addition to vehicle sales, CarMax earns significant revenue from its financing services, where it offers loans to customers through its own finance arm. This includes both retail and wholesale financing. Additionally, CarMax offers extended service plans and vehicle warranties, which further contribute to its earnings. The company's focus on a transparent, customer-friendly buying experience has built strong brand loyalty, while its national footprint allows it to leverage economies of scale in vehicle procurement and sales. Partnerships with various financial institutions also enhance its financing capabilities, providing customers with competitive loan options.

CarMax Financial Statement Overview

Summary

CarMax demonstrates stable profitability and strong cash flow generation, but faces challenges with revenue growth and high leverage. The income statement reflects consistent margins, while the balance sheet indicates significant debt levels. Cash flow performance is robust, with positive growth trends. The company should focus on managing leverage and improving revenue growth to enhance financial stability.

Income Statement

CarMax's income statement shows a mixed performance. The TTM data indicates a slight decline in revenue growth at -1.56%, which is a concern. However, the company maintains a stable gross profit margin of 11.21% and a net profit margin of 1.98%. The EBIT margin of 4.66% and EBITDA margin of 4.85% suggest moderate profitability. Overall, the income statement reflects stable profitability but with challenges in revenue growth.

Balance Sheet

The balance sheet reveals a high debt-to-equity ratio of 2.87, indicating significant leverage, which could pose a risk. Return on equity is moderate at 8.36%, reflecting decent profitability relative to equity. The equity ratio stands at 22.89%, suggesting a moderate level of equity financing. While the company is profitable, the high leverage is a potential concern.

Cash Flow

CarMax's cash flow statement shows positive trends, with a free cash flow growth rate of 26.65% in the TTM period. The operating cash flow to net income ratio is 0.54, indicating reasonable cash generation relative to net income. The free cash flow to net income ratio of 0.57 suggests that the company is generating sufficient free cash flow. Overall, the cash flow position is strong, with positive growth and adequate cash generation.

Breakdown	TTM	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	26.37B	26.35B	26.54B	29.68B	31.90B	18.95B
Gross Profit	2.96B	2.90B	2.71B	2.80B	3.29B	2.38B
EBITDA	1.28B	1.07B	1.04B	1.02B	2.09B	1.29B
Net Income	521.07M	500.56M	479.20M	484.76M	1.15B	746.92M
Balance Sheet
Total Assets	27.08B	27.40B	27.20B	26.18B	26.34B	21.54B
Cash, Cash Equivalents and Short-Term Investments	540.37M	246.96M	574.14M	314.76M	102.72M	132.32M
Total Debt	17.77B	19.43B	19.53B	18.93B	19.27B	15.53B
Total Liabilities	20.88B	21.16B	21.12B	20.57B	21.10B	17.18B
Stockholders Equity	6.20B	6.24B	6.07B	5.61B	5.24B	4.36B
Cash Flow
Free Cash Flow	685.04M	156.50M	-6.69M	860.62M	-2.86B	503.22M
Operating Cash Flow	1.21B	624.44M	458.62M	1.28B	-2.55B	667.76M
Investing Cash Flow	-518.00M	-461.00M	-467.00M	-425.77M	-523.75M	-128.18M
Financing Cash Flow	-638.18M	-453.54M	307.79M	-710.18M	3.10B	-424.02M

CarMax Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 46.42
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For KMX, the sentiment is Negative. The current price of 46.42 is below the 20-day moving average (MA) of 54.66, below the 50-day MA of 56.97, and below the 200-day MA of 69.30, indicating a bearish trend. The MACD of -3.88 indicates Positive momentum. The RSI at 26.67 is Positive, neither overbought nor oversold. The STOCH value of 20.64 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for KMX.

CarMax Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
GPI	75 Outperform	$5.80B	12.41	15.72%	0.44%	19.75%	-10.74%
ABG	74 Outperform	$4.98B	9.25	15.19%	―	8.39%	40.35%
LAD	71 Outperform	$8.23B	9.51	13.34%	0.67%	10.25%	9.08%
AN	70 Outperform	$8.46B	14.06	27.24%	―	3.15%	-12.49%
PAG	68 Neutral	$11.51B	12.14	18.11%	2.86%	2.39%	5.84%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%
KMX	56 Neutral	$6.82B	13.63	8.42%	―	2.17%	28.59%