CarMax (KMX) Stock Forecast & Price Target

CarMax's positive outlook is supported by a significant increase in sales of older, higher mileage vehicles, which grew from 35% to 40% of total sales year-over-year, indicating a strong demand in this segment. The company is also enhancing its advertising efforts, with a notable increase in advertising spend per retail unit, which surged 48.2% from the previous year, aimed at driving further market awareness and sales growth. Additionally, CarMax's Consumer Automotive Financing (CAF) income demonstrated resilience, growing 9.3% year-over-year, contributing to overall financial strength as the company anticipates a modest revenue adjustment for fiscal 2026.

CarMax experienced a significant year-over-year decline in retail unit sales, falling by 8% and reflecting a reduction in used unit comps by 9%, which is concerning against the backdrop of management's guidance expectations. Despite achieving a slightly higher average selling price (ASP) of $26.4K, retail gross profit per unit decreased by 3% year-over-year, indicating challenges in maintaining profitability amidst declining unit sales. Additionally, gross profit from other sources dropped 16% and wholesale gross profits decreased by 11.4%, further exacerbating the company's financial pressures and suggesting an unfavorable outlook for its stock performance.