CarMax stock dropped 17% after earnings, but improvements in metrics may present a buying opportunity

From Yahoo Finance: 2025-04-19 03:43:00

CarMax (NYSE: KMX) stock tumbled after weaker-than-expected earnings, causing a decline in investor sentiment. However, the stock is now at a more attractive price point, potentially presenting a buying opportunity.

Despite a 17% drop in value post-earnings call, CarMax’s results could make the stock appealing again with improved metrics and record gross profit per retail used unit.

CarMax saw a significant 81% increase in earnings per share, but still missed analyst estimates. Net revenue rose 6.7% and retail used unit sales increased, showing positive momentum in the second half of the year.

CarMax holds a 3.7% market share in the used car industry and posted strong per-vehicle metrics. Online sales accounted for a growing portion of revenue, showing the company’s adaptability to new trends.

Tariff impacts could benefit CarMax as new vehicle prices rise, pushing consumers towards used cars. CEO William Nash sees potential in late-model used cars as a result of tariffs, adding to the company’s appeal.

Analysts express confidence in CarMax’s solid sales and profit growth, with some rating upgrades. The company’s sales momentum, online presence, and potential tariff benefits position it as an intriguing investment opportunity.

Before investing in CarMax, consider the potential impact of a recession on the automotive industry. While the company shows promise, market conditions could affect its performance.

The Motley Fool Stock Advisor team identifies top stocks for investment, excluding CarMax. Past recommendations have yielded significant returns, highlighting the potential for lucrative investments elsewhere.

Read more: CarMax Stock Got Clobbered 17% in One Day. Is the Stock a Buy Now?