CarMax (KMX) Stock Forecast & Price Target

CarMax, established in 1993 and a leading player in the U.S. used vehicle market, achieved significant fiscal 2025 sales metrics with 789,050 retailed and 544,312 wholesaled vehicles, highlighting its dominant position as the largest used-vehicle retailer in the country despite only a 3.7% market share among vehicles aged 0-10 years. The company is poised to benefit from ongoing market recovery, leveraging its extensive physical presence and new leadership to pursue a target of over 5% market share, supported by improved operational and financing strategies in its CarMax Auto Finance segment. Additionally, encouraging trends in customer satisfaction practices and improved delinquency rates suggest a favorable environment for enhancing profitability and driving long-term growth.

CarMax is forecasting a significant decline in comparable store used unit sales, expecting a year-over-year decrease of 8% to 12%, which reflects broader challenges in the used vehicle market, including high depreciation rates and increasing competition for financing among lower-tier customers. The company's projected diluted earnings per share (EPS) range of $0.18 to $0.36 falls notably short of consensus estimates, indicating a sharp contraction in profitability driven by declining retail unit sales and escalating marketing expenditures. Additionally, the impending departure of CEO Bill Nash introduces further uncertainty, as investor confidence in future performance has been consistently waning amid unfavorable affordability conditions exacerbated by elevated vehicle prices and interest rates.