Start here if you're new
what it is
CarMax runs 253 stores that sell used cars, auction them, and finance buyers.
how it gets paid
Last year Carmax made $26.4B in revenue. Retail used vehicles was the main engine at $21.0B, or 80% of sales.
why growth slowed
Revenue fell 0.7% last year. Mccreight, a proven retail brand leader and strategist, succeeds bill nash, who stepped down effective december 1st, following a 30+ year career with carmax.
what just happened
CarMax posted $0.43 EPS against $0.60 expected, a 28.3% miss.
At a glance
B+ balance sheet — decent shape, but not bulletproof
55/100 earnings predictability — expect surprises
13.9x trailing p/e — the market's not buying it — or you found a deal
2.0% return on capital — nothing to write home about
xvary composite: 63/100 — average
What they do
CarMax runs 253 stores that sell used cars, auction them, and finance buyers.
CarMax sold 789,050 used vehicles and operated 253 stores across 109 markets. That scale gives you one place to trade in, buy, and finance a car. Operating margin means profit after running the business, and 2.0% says the model makes money by volume, not pricing power.
How they make money
$26.4B
annual revenue · their business grew -0.7% last year
Retail used vehicles
$21.0B
Wholesale vehicle auctions
$2.9B
Vehicle financing
$1.4B
Extended protection plans
$0.7B
Other services
$0.4B
The products that matter
selling used cars to consumers
Used Vehicle Retail
$26.4B revenue
it's the entire $26.4B business. revenue fell 0.7% last year, which matters more when the company keeps only 1.6 cents of each dollar.
100% of revenue
Key numbers
$63
Target
That is 56% above $40.32. The stock trades $22.68 below that level.
2.0%
Op margin
Running-margin profit is tiny. A 2.0% margin means small misses matter.
$16.6B
Debt
Long-term debt is 74% of capital. That limits flexibility.
253
Stores
The store count gives scale. More stores mean more cars, more trades, more financing.
Financial health
B+
strength
- balance sheet grade B+ — solid but not elite
- risk rank 3 — safer than 50% of stocks
- price stability 35 / 100
- long-term debt $16.6B (74% of capital)
- net profit margin 1.7% — keeps 2 cents of every dollar in revenue
- return on equity 7% — $0.07 profit for every $1 investors have put in
B+ — functional but not a standout on the balance sheet.
Total return vs. market
You invested $10,000 in KMX 3 years ago → it's now worth $6,370.
The index would have given you $14,770.
source: institutional data · total return
What just happened
missed estimates
CarMax posted $0.43 EPS against $0.60 expected, a 28.3% miss.
Revenue came in at $5.79B for the quarter ended November 30, 2025, down from $6.22B. Gross margin was 11.0%.
$5.79B
revenue
$0.43
eps
11.0%
gross margin
the number that mattered
The key number was $0.43 EPS versus $0.60 expected. That is a 28.3% miss and it says pricing power is thin.
-
carmax has entered a period of leadership transition.
-
in early november, the company announced a ceo change, as david mccreight, a member of the board of directors, was named interim president and chief executive officer.
-
mr.mccreight, a proven retail brand leader and strategist, succeeds bill nash, who stepped down effective december 1st, following a 30+ year career with carmax.
-
mr.
-
nash’s removal comes amid a disappointing year for carmax marked by declining comparable store unit sales and lower profits.the search to identify a permanent ceo is underway and being supported by leading professional search firm russell reynolds associates.
source: company earnings report, 2026
Get this snapshot in your inbox
This page, delivered free — plus weekly updates when the numbers change. plain english, no spam.
weekly updates
earnings alerts
plain english
no spam
What could go wrong
the top threat is used-car demand and financing pressure. when the average customer pulls back, this entire $26.4B machine feels it fast.
med
used-car demand and financing pressure
this is the core business. if shoppers balk at monthly payments or delay purchases, revenue pressure hits immediately because used vehicle retail is the whole $26.4B story here.
with a 1.6% net margin, even modest volume or pricing weakness can do outsized damage to profit.
med
margin compression on thin economics
carmax already operates at a 1.9% operating margin. that's the issue. There isn't much cushion for weaker pricing, higher sourcing costs, or extra expense.
a business keeping roughly 2 cents on the dollar does not need a large mistake to miss earnings.
low
leadership transition execution risk
the company announced a CEO change, named david mccreight interim CEO, and began a search for a permanent leader. Turnarounds are harder when the permanent operator is still unknown.
if execution slips during the transition, investors may keep discounting the stock even if revenue stabilizes.
med
debt load versus profit base
$16.6B of long-term debt and 74% of capital is manageable when the engine is running well. It looks less friendly when return on equity is 7% and net margin is 1.6%.
the balance sheet is not broken, but it reduces room for error if earnings stay soft.
the combined risk picture is simple: 100% of the revenue base sits in a low-margin retail model, so small operating misses can create large earnings swings.
source: institutional data · regulatory filings · risk analysis
Pay attention to
metric
watch operating margin first
it's 1.9% today. if that number does not improve, the cheap multiple will not matter much.
calendar
the permanent CEO hire
interim leadership can stabilize a business. a permanent hire tells you what the board thinks the next chapter should look like.
trend
whether EPS estimates hold at $3.00
flat or rising estimates would suggest the street sees stabilization. cuts would tell you the recovery is slipping.
risk
institutional selling pressure
institutions have been net sellers for three straight quarters. if that keeps going, valuation support can stay theoretical for a while.
Analyst rankings
short-term outlook
top 20%
momentum score 2. analysts expect above-average price performance in the year ahead. in human-speak, they think the rebound case is still alive.
risk profile
average
stability score 3. this is middle-of-the-road risk on paper, even if the operating model feels less forgiving than that label suggests.
chart momentum
below average
technical score 4. translation: the chart has not earned investor trust yet.
earnings predictability
55 / 100
results are harder to model than you want. the quarterly EPS path — $1.38, $0.64, $0.43, $0.45 — shows why.
source: institutional data
Institutional activity
institutions have been net selling for 3 consecutive quarters — 286 buyers vs. 412 sellers in 3q2025. total institutional holdings: 0.1B shares. net selling for 3 quarters.
source: institutional data
Price targets
3-5 year target range
$34
$92
$40
current price
$63
target midpoint · +56% from current · 3-5yr high: $90 (+125% · 22% ann'l return)
Want the deeper analysis?
The full deep dive: dcf model, scenario analysis, competitive moat breakdown, and quarterly tracking — everything on this page, taken further.
see plans from $5/moThe deep dive