CarMax Stock (KMX) Underperforms Into Earnings: Will the Used Car Giant Shift Gears?

CarMax Inc. (NYSE: KMX), the nation’s largest retailer of used vehicles, is heading into its next earnings announcement with its stock price struggling to gain traction. The stock has declined 28.9% since the beginning of the year, leaving markets questioning the company’s near-term prospects.

Analysts expect CarMax to report earnings per share (EPS) of $1.03, up from $0.85 in the same period last year. Revenue is projected at approximately $7.02 billion, reflecting a modest year‑over‑year sales growth of just 0.10%.

With a 52-week range spanning from a low of $54.53 to a high of $91.25, and significantly below its all-time high of $154.85, the pressure is mounting for CarMax to deliver a strong performance and reassure shareholders.

Recent financial results paint a mixed picture. CarMax’s fourth-quarter fiscal 2025 earnings, reported in April, revealed adjusted earnings per share (EPS) of $0.58, missing the consensus estimate of $0.66. While revenue increased by 6.7% year-over-year to $6 billion, it also fell short of the projected $6.04 billion. Although retail used unit sales saw a rise of 6.2% to 182,655 units, and CarMax Auto Finance income increased by 8.2%, the company's decision to remove timeframes for its long-term goals stoked market worries.

The struggles continued into the first quarter of fiscal 2025, where CarMax reported a 33% decrease in profit, with net income falling to $152.4 million, or $0.97 per share, compared to $228.3 million, or $1.44 per share, the previous year. Revenue also missed expectations, coming in at $7.11 billion against an estimated $7.21 billion.

This decline was attributed to increased new vehicle availability and more appealing trade-in offers from dealerships, exacerbated by persistent inflation, elevated interest rates, and tighter lending standards affecting affordability.

On the other hand, the company has made significant investments in modernizing its operations, including enhancing its online platform and improving the customer experience. These investments, while not immediately reflected in the bottom line, could position CarMax for long-term success.