CarMax, Inc. (NYSE:KMX) Faces Market Challenges Despite Solid Unit Margins

CarMax reported earnings per share (EPS) of $0.64, below the estimated $1.03, with revenue of approximately $6.59 billion against the expected $7.02 billion. Retail used unit sales and comparable store used unit sales saw declines of 5.4% and 6.3%, respectively, impacting the company's stock value and financial performance. Despite a decrease in sales volume, CarMax maintained solid unit margins, with a gross profit per retail used unit of $2,216 and per wholesale unit of $993.

CarMax, Inc. (NYSE:KMX) is a leading retailer of used cars in the United States, operating through two segments: CarMax Sales Operations and CarMax Auto Finance. Known for its no-haggle pricing and comprehensive vehicle inspection process, CarMax competes with other used car retailers like AutoNation and Carvana.

On September 25, 2025, CarMax reported earnings per share (EPS) of $0.64, which was below the estimated $1.03. The company's revenue was approximately $6.59 billion, falling short of the expected $7.02 billion. This shortfall in earnings and revenue reflects the challenges CarMax is facing in the current market environment.

CarMax has experienced a decline in used-car sales, even after reducing prices. Retail used unit sales decreased by 5.4%, and comparable store used unit sales fell by 6.3%. Wholesale units also saw a reduction of 2.2%. These declines have significantly impacted the company's stock value and financial performance.

Despite these challenges, CarMax maintained solid unit margins. The gross profit per retail used unit was $2,216, and $993 per wholesale unit. The Extended Protection Plans (EPP) margin was $576 per retail unit, consistent with the previous year's second quarter. This indicates that while sales volume has decreased, the company has managed to maintain profitability on a per-unit basis.

CarMax's financial metrics provide insight into its market valuation and financial health. The company has a price-to-earnings (P/E) ratio of approximately 15.54 and a price-to-sales ratio of about 0.32. The enterprise value to sales ratio is around 0.98, and the enterprise value to operating cash flow ratio is approximately 25.17. The debt-to-equity ratio is about 2.85, indicating significant financial leverage. However, CarMax has a strong liquidity position, with a current ratio of approximately 2.39, suggesting it can cover its short-term liabilities.