Bear of the Day: CarMax (KMX)

CarMax KMX is the nation’s largest retailer of used autos, with its omni-channel strategy delivering a very customer-centric offering. Analysts have taken a bearish stance on the company’s EPS outlook, pushing it into a Zacks Rank #5 (Strong Sell).

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Let’s take a closer look at what’s been going on.

CarMax

KMX shares have had a tough showing in 2025 so far, down more than 50% and regularly being brought down by quarterly results. Retail used units were down 8% in its latest release, with comparable store used unit sales also falling 9%. Sales growth has been minimal, as shown below.

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Wholesale units were also down 6.2%, gross profit per wholesale unit cratered, with both margin and volume being impacted by steep market depreciation. Importantly, the company announced leadership changed, with David McCreight, interim CEO, stating –

“I’m honored to serve as Interim President and CEO at this important juncture for CarMax. Our unmatched physical and digital infrastructure, beloved national brand, and award-winning culture provide us with incredible advantages. Despite these advantages, based on recent results, it is clear CarMax needs change.”

Bottom Line

Analysts' negative earnings estimate revisions, resulting from a growth cooldown, paint a challenging picture for the company’s shares in the near term.

CarMax KMX is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term.

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This article originally published on Zacks Investment Research (zacks.com).

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