One-glance verdict
Within fair range
$30.23 our estimate vs market $59.66
Wall Street consensus: $54.85 (81.5% higher than our fair-value estimate)
97% above our estimate
Fundamentals snapshot
CarMax, Inc.
KMX · NYQ · Consumer Cyclical · Auto & Truck Dealerships
Current price
$59.66
52-week range
$30.26 - $65.28
Market cap
$8.47B
Balance sheet
Distressed
-0.47x Concerning
Net debt $18.70B. Interest coverage shows how many times profit covers the interest bill.
What stands out
2 Rewards
2 Risks
2 rewards · 2 risks
- Reward Revenue grew 1.8% last year.
- Reward Free cash flow was positive in 4/10 years.
- Risk Stock trades 47.5% above its 5-year average P/E.
- Risk Insider ownership is only 0.5% (peer median: 1.5%).
What this company does
CarMax, Inc.
CarMax is a large retailer of used cars in the United States, offering customers a wide variety of vehicle makes and models. The company makes money not just from selling cars, but also from providing financing (car loans) to buyers and offering extended protection plans. This matters because by being a one-stop-shop for the car, the loan, and the warranty, CarMax can earn more profit from each customer's purchase.
How the company got here
CarMax was started in 1993 by executives from the electronics retailer Circuit City. They wanted to apply the 'big-box store' idea to the used car business, which was known for being fragmented and often stressful for customers. Their key idea was to offer a large selection of cars at fixed, no-haggle prices, creating a more transparent and relaxed buying experience. This approach was revolutionary at the time and helped the company grow rapidly. CarMax eventually split from Circuit City in 2002 to become its own publicly traded company.
What it actually does
CarMax is the largest retailer of used cars in the United States. Think of them as a superstore for used vehicles where you can buy, sell, or trade in your car. They offer a wide variety of makes and models in a 'no-haggle' environment, which means the price you see is the price you pay, removing the stress of negotiation. Customers can shop online, in-person at their many locations, or a mix of both. Beyond just selling cars, they also provide financing, sell extended warranties, and will buy your car even if you don't buy one from them.
CarMax Sales Operations
This is the main part of CarMax's business and includes all the activities related to buying and selling cars. It's where the vast majority of the company's revenue (the total money it brings in) comes from. This segment includes the retail sales of used cars to the public, which is their primary business. It also includes a wholesale auction business, where they sell cars that don't meet their retail standards to other dealers. Additionally, this part of the company sells extended protection plans (sometimes called service warranties) and provides vehicle repair services.
CarMax Auto Finance (CAF)
This is the company's own financing division, which acts like a bank specifically for CarMax customers. When a customer buys a car, CAF can offer them a loan to pay for it over time. CarMax earns money from the interest paid on these loans, which makes this a significant and profitable part of the business, even though it's much smaller than the car sales side. This in-house financing helps make the car-buying process smoother for customers and creates an additional income stream for the company.
What management is betting on now
Management is focused on creating a seamless 'omnichannel' experience, which means making it easy for customers to move between shopping online and visiting a physical store. A key priority is to use technology and data to make the business more efficient, from reconditioning cars to managing logistics (the process of moving cars). They are also aiming to increase their market share (the percentage of all used cars sold in the country) by offering competitive pricing. The company is also focused on growing its supporting businesses, like selling more extended service contracts, to increase the value from each customer transaction.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2025 Q2
$509.89M
FY2025 Q3
$-150.55M
FY2025 Q4
$18.76M
FY2026 Q1
$162.81M
FY2026 Q2
$654.03M
FY2026 Q3
$1.11B
FY2026 Q4
$-687.29M
FY2027 Q1
$-85.75M
Revenue
$8.01B
Net income
$185.63M
Diluted EPS
1.31
Operating cash flow
$17.59M
Free cash flow
$-85.75M
Fetching…
Sources
Revenue
$5.95B
Net income
$-120.68M
Diluted EPS
-0.77
Operating cash flow
$-554.27M
Free cash flow
$-687.29M
Fetching…
Sources
Revenue
$5.79B
Net income
$62.22M
Diluted EPS
0.43
Operating cash flow
$1.25B
Free cash flow
$1.11B
Fetching…
Sources
Revenue
$6.59B
Net income
$95.38M
Diluted EPS
0.64
Operating cash flow
$785.49M
Free cash flow
$654.03M
Fetching…
Sources
Revenue
$7.55B
Net income
$210.38M
Diluted EPS
1.38
Operating cash flow
$299.54M
Free cash flow
$162.81M
Fetching…
Sources
Revenue
$6.00B
Net income
$89.87M
Diluted EPS
0.58
Operating cash flow
$146.38M
Free cash flow
$18.76M
Fetching…
Sources
Revenue
$6.22B
Net income
$125.44M
Diluted EPS
0.81
Operating cash flow
$-23.35M
Free cash flow
$-150.55M
Fetching…
Sources
Revenue
$7.01B
Net income
$132.81M
Diluted EPS
0.85
Operating cash flow
$619.10M
Free cash flow
$509.89M
Fetching…
Sources
Is it cheap or expensive?
Fair value $30.23 vs current price $59.66
Wall Street consensus is the average analyst price target: $54.85 (81.5% higher than our fair-value estimate).
Our most-likely fair value is $30.23 a share — about 49.3% away from today's price of $59.66, so the stock currently looks fairly priced.
Is it drowning in debt?
Distressed
Net debt $18.7B. Interest coverage -0.5x.
Net debt
$18.70B
Interest coverage
-0.47x
CarMax, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here.
Distressed
Worse cushion
Baseline
Better cushion
KMX
BASELINE
CarMax, Inc.
Total debt $18.83B Interest coverage -0.47x This is the baseline the peer rows are being compared against.
Total debt $11.33B Interest coverage 2.94x This peer still has a real interest-payment cushion, while KMX does not.
Total debt $5.70B Interest coverage 3.72x This peer still has a real interest-payment cushion, while KMX does not.
Total debt $16.56B Interest coverage 1.83x This peer still has a real interest-payment cushion, while KMX does not.
Total debt $9.37B Interest coverage 4.88x This peer still has a real interest-payment cushion, while KMX does not.
Total debt $5.53B Interest coverage 3.59x This peer still has a real interest-payment cushion, while KMX does not.
What you should know
The case for and against KMX
2 Rewards
2 Risks
Rewards
-
Revenue grew 1.8% last year.
-
Free cash flow was positive in 4/10 years.
Risks
-
Stock trades 47.5% above its 5-year average P/E.
-
Insider ownership is only 0.5% (peer median: 1.5%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
37.06x
Forward P/E
19.53x
P/B
1.38x
P/S
0.30x
EV/EBITDA
26.37x
PEG ratio
0.61x
Profitability
How much profit each dollar creates
Gross margin
11.8%
Operating margin
3.4%
Net margin
0.8%
ROE
3.6%
ROA
1.6%
Health
Liquidity and balance-sheet strength
Debt / equity
3.08x
Current ratio
2.71x
Quick ratio
0.18x
Total debt
$18.83B
Total cash
$132.22M
Growth
How the business has been compounding
Revenue TTM
$26.35B
Revenue 5Y CAGR
-5.1%
EPS TTM
1.61
EPS 5Y CAGR
-17.8%
Cash flow
How much cash the business throws off
Operating CF TTM
$1.50B
Free CF TTM
$1.24B
FCF margin
4.7%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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