We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
CarMax Q1 Earnings Beat Estimates on Revenue Growth, Cost Control
Read MoreHide Full Article
Key Takeaways
KMX beat Q1 earnings and revenue estimates as total revenues rose 6.2% year over year.
CarMax cut SG&A 3.7% and remains on track for $200M in exit-rate savings by fiscal 2027.
KMX outlined a four-pillar strategy to drive unit growth, earnings growth and shareholder returns.
CarMax, Inc. (KMX - Free Report) reported earnings per share of $1.31 for the first quarter of fiscal 2027, beating the Zacks Consensus Estimate of 94 cents by 39.61%. The bottom line declined 5.1% from $1.38 in the year-ago quarter.
Quarterly revenues rose 6.2% year over year to $8.01 billion, surpassing the consensus mark of $7.6 billion by 5.43%. Results benefited from higher retail and wholesale revenues, while combined retail and wholesale unit sales rose 3.3% to 392,357.
For the quarter ended May 31, 2026, CarMax’s total net sales and operating revenues were $8.01 billion, up from $7.55 billion a year ago. Used vehicle sales increased 4.7% to $6.39 billion, reflecting a higher average retail selling price.
Total retail used vehicle unit sales were nearly flat at 230,293 versus 230,210 in the prior-year quarter. Comparable-store used-unit sales declined 0.8%, as the company lapped a year-ago quarter that benefited from tariff-driven demand.
CarMax Wholesale Momentum Supports the Top Line
Wholesale vehicle sales rose 14% year over year to $1.43 billion. Wholesale unit sales increased 8.4% to 162,064, while the average wholesale selling price climbed 5.1% to $8,364.
The wholesale business helped offset pressure on retail profitability. Wholesale vehicle gross profit increased 8.3% to $169.5 million, with gross profit per wholesale unit of $1,046, essentially in line with $1,047 in the prior-year quarter.
KMX Margins Face Pricing Pressure
Total gross profit declined 4.4% year over year to $854.4 million. Retail used vehicle gross profit fell 9.5% to $501.4 million, hurt by lower per-unit profitability.
Retail gross profit per used unit was $2,177, down $230 from last year’s all-time record due to the continuation of pricing actions aimed at driving an improved sales trend.
CarMax Cost Cuts Drive SG&A Leverage
Selling, general and administrative expenses decreased 3.7% year over year to $635.2 million. The decline was primarily driven by lower compensation and benefits costs as the company made progress on targeted SG&A reductions.
SG&A per total unit improved 6.8% to $1,619, down $118 from the year-ago quarter. CarMax remains on track to achieve $200 million in SG&A exit-rate savings by the end of fiscal 2027.
KMX Finance Arm Expands Penetration
CarMax Auto Finance’s income was $140.2 million, down 1% from the year-ago quarter. The decline reflected lower auto loans outstanding following last year’s $900 million non-prime securitization, partly offset by interest earned on higher-margin receivables and servicing income.
CAF financed 43.3% of units sold after the impact of three-day payoffs, up 150 basis points year over year. The total interest margin percentage improved 20 basis points to 6.7%, while the weighted average contract rate was 11.3%, broadly in line with the prior-year quarter.
CarMax Strategy Focuses on Growth Pillars
CEO Keith Barr introduced a four-pillar strategic framework focused on improving CarMax’s offering, simplifying the customer experience, adding value on each transaction and running lean. The company plans to share more details at a strategic update in late fall.
Pricing competitiveness, saleable inventory, digital-to-store conversion, CAF growth, EPP margin expansion, reconditioning efficiency and logistics improvements are key areas of focus for the company. The goal is to drive unit growth and earnings growth while supporting shareholder returns over time.
KMX’s Balance Sheet Remains in Focus
CarMax ended the quarter with cash and cash equivalents of $132.2 million and inventory of $4.06 billion. Long-term debt excluding the current portion was $2.06 billion, while the current portion of long-term debt was $17.2 million.
The company did not repurchase shares during the first quarter. It had $1.31 billion remaining under its share repurchase authorization as of May 31, 2026, and intends to resume buybacks at an appropriate time depending on market conditions, leverage and capital needs. KMX carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Carvana Co. (CVNA - Free Report) reported first-quarter 2026 (ended March 31, 2026) earnings of $1.69 per share, which beat the Zacks Consensus Estimate of $1.42 by 18.69% and increased from $1.51 in the year-ago quarter. Better-than-expected revenues across all segments drove the strong performance. Revenues of $6.43 billion beat the Zacks Consensus Estimate of $6.16 billion by 4.39% and increased 52% from last year.
AutoNation, Inc. (AN - Free Report) reported first-quarter 2026 (ended March 31, 2026) adjusted earnings of $4.69 per share, which missed the Zacks Consensus Estimate of $4.71 by 0.43%. Revenues totaled $6.55 billion, missing the Zacks Consensus Estimate of $6.66 billion by 1.6%. The top line declined from $6.69 billion reported in the first quarter of 2025. The results showed a familiar pattern: strong performance in higher-margin businesses was offset by weaker sales volumes and higher costs. Adjusted free cash flow was $255.6 million, with a solid 155% conversion of adjusted net income.
View the Zacks #1 Rank List
Image: Zacks
CarMax Q1 Earnings Beat Estimates on Revenue Growth, Cost Control
Key Takeaways
CarMax, Inc. (KMX - Free Report) reported earnings per share of $1.31 for the first quarter of fiscal 2027, beating the Zacks Consensus Estimate of 94 cents by 39.61%. The bottom line declined 5.1% from $1.38 in the year-ago quarter.
Quarterly revenues rose 6.2% year over year to $8.01 billion, surpassing the consensus mark of $7.6 billion by 5.43%. Results benefited from higher retail and wholesale revenues, while combined retail and wholesale unit sales rose 3.3% to 392,357.
CarMax, Inc. Price, Consensus and EPS Surprise
CarMax, Inc. price-consensus-eps-surprise-chart | CarMax, Inc. Quote
KMX Sales Rise on Higher Vehicle Pricing
For the quarter ended May 31, 2026, CarMax’s total net sales and operating revenues were $8.01 billion, up from $7.55 billion a year ago. Used vehicle sales increased 4.7% to $6.39 billion, reflecting a higher average retail selling price.
Total retail used vehicle unit sales were nearly flat at 230,293 versus 230,210 in the prior-year quarter. Comparable-store used-unit sales declined 0.8%, as the company lapped a year-ago quarter that benefited from tariff-driven demand.
CarMax Wholesale Momentum Supports the Top Line
Wholesale vehicle sales rose 14% year over year to $1.43 billion. Wholesale unit sales increased 8.4% to 162,064, while the average wholesale selling price climbed 5.1% to $8,364.
The wholesale business helped offset pressure on retail profitability. Wholesale vehicle gross profit increased 8.3% to $169.5 million, with gross profit per wholesale unit of $1,046, essentially in line with $1,047 in the prior-year quarter.
KMX Margins Face Pricing Pressure
Total gross profit declined 4.4% year over year to $854.4 million. Retail used vehicle gross profit fell 9.5% to $501.4 million, hurt by lower per-unit profitability.
Retail gross profit per used unit was $2,177, down $230 from last year’s all-time record due to the continuation of pricing actions aimed at driving an improved sales trend.
CarMax Cost Cuts Drive SG&A Leverage
Selling, general and administrative expenses decreased 3.7% year over year to $635.2 million. The decline was primarily driven by lower compensation and benefits costs as the company made progress on targeted SG&A reductions.
SG&A per total unit improved 6.8% to $1,619, down $118 from the year-ago quarter. CarMax remains on track to achieve $200 million in SG&A exit-rate savings by the end of fiscal 2027.
KMX Finance Arm Expands Penetration
CarMax Auto Finance’s income was $140.2 million, down 1% from the year-ago quarter. The decline reflected lower auto loans outstanding following last year’s $900 million non-prime securitization, partly offset by interest earned on higher-margin receivables and servicing income.
CAF financed 43.3% of units sold after the impact of three-day payoffs, up 150 basis points year over year. The total interest margin percentage improved 20 basis points to 6.7%, while the weighted average contract rate was 11.3%, broadly in line with the prior-year quarter.
CarMax Strategy Focuses on Growth Pillars
CEO Keith Barr introduced a four-pillar strategic framework focused on improving CarMax’s offering, simplifying the customer experience, adding value on each transaction and running lean. The company plans to share more details at a strategic update in late fall.
Pricing competitiveness, saleable inventory, digital-to-store conversion, CAF growth, EPP margin expansion, reconditioning efficiency and logistics improvements are key areas of focus for the company. The goal is to drive unit growth and earnings growth while supporting shareholder returns over time.
KMX’s Balance Sheet Remains in Focus
CarMax ended the quarter with cash and cash equivalents of $132.2 million and inventory of $4.06 billion. Long-term debt excluding the current portion was $2.06 billion, while the current portion of long-term debt was $17.2 million.
The company did not repurchase shares during the first quarter. It had $1.31 billion remaining under its share repurchase authorization as of May 31, 2026, and intends to resume buybacks at an appropriate time depending on market conditions, leverage and capital needs. KMX carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Peer Releases
Carvana Co. (CVNA - Free Report) reported first-quarter 2026 (ended March 31, 2026) earnings of $1.69 per share, which beat the Zacks Consensus Estimate of $1.42 by 18.69% and increased from $1.51 in the year-ago quarter. Better-than-expected revenues across all segments drove the strong performance. Revenues of $6.43 billion beat the Zacks Consensus Estimate of $6.16 billion by 4.39% and increased 52% from last year.
AutoNation, Inc. (AN - Free Report) reported first-quarter 2026 (ended March 31, 2026) adjusted earnings of $4.69 per share, which missed the Zacks Consensus Estimate of $4.71 by 0.43%. Revenues totaled $6.55 billion, missing the Zacks Consensus Estimate of $6.66 billion by 1.6%. The top line declined from $6.69 billion reported in the first quarter of 2025. The results showed a familiar pattern: strong performance in higher-margin businesses was offset by weaker sales volumes and higher costs. Adjusted free cash flow was $255.6 million, with a solid 155% conversion of adjusted net income.