CarMax Prepares for Q4 Earnings Report amid Mixed Market Trends

With a market cap of $12.1 billion, CarMax, Inc. (KMX) stands as the largest used-car retailer in the United States. Founded in 1993, CarMax has revolutionized the pre-owned vehicle market with its no-haggle pricing and focus on customer service. The Richmond, Virginia-based company is set to release its Q4 earnings report on Thursday, April 10.

As the earnings report approaches, analysts anticipate CarMax will report a profit of $0.64 per share. This marks a notable increase of 100% compared to last year’s $0.32 per share for the same quarter. It is worth noting that in the past four quarters, the company has missed Wall Street’s bottom-line estimates three times and met them once. In the previous quarter, CarMax reported an EPS of $0.81, surpassing expectations by 30.7% due to robust demand and steady vehicle valuations.

For the fiscal year 2025, analysts predict the company will report an estimated EPS of $3.27, reflecting an 8.3% increase from the $3.02 recorded in fiscal 2024. Looking further ahead, EPS is projected to rise by 16.8% annually, reaching $3.82 in fiscal 2026.

Over the past year, KMX shares have declined by 1.2%, underperforming compared to the broader S&P 500 Index, which has gained nearly 8.9%, and the Consumer Discretionary Select Sector SPDR Fund (XLY), which rose by 13.1% during the same period.

KMX’s recent underperformance can be attributed to falling used car prices that have pressured profit margins, despite higher sales volume. Additionally, high interest rates and inflation have affected vehicle financing’s affordability, reducing overall demand.

Nonetheless, optimism surrounds the stock as it gained over 2% on March 27, amid speculation that the recently imposed 25% tariff on U.S. auto imports will lead more consumers to consider used cars. As prices for new vehicles are expected to increase, buyers may look to pre-owned options or extend the life of their current vehicles, providing a potential boost to CarMax’s sales and financing operations.

Analysts maintain a cautiously optimistic view on CarMax’s stock, assigning it a “Moderate Buy” rating. Out of 17 analysts covering the stock, there are seven “Strong Buys,” three “Moderate Buys,” four “Holds,” one “Moderate Sell,” and two “Strong Sells.”

KMX’s average price target of $87.57 suggests a 5.8% premium from its current trading level.

On the date of publication, Kritika Sarmah did not hold (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are provided solely for informational purposes. For further details, please view the Barchart Disclosure Policy here.

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The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Nasdaq, Inc.