Carmax Inc Dossier
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SectorConsumer Discretionary IndustryAuto & Truck Dealerships Beta (adjusted)1.11 Intrinsic Value $63.13median of 5 methods · middle span $34-$69based on filings through 31 May 2026 Market Price $55.89Price as of 1 Oct 2026 Near fair valueIntrinsic value is 13% above the market price −50% · IV below pricenear fair value ±15%IV above price · +50% Data confidence Sign in to view data confidence Market Cap $7.9B Enterprise Value $25.4B Shares Outstanding 137.2M diluted Next Earnings Date17 Dec 2026 All prices and values are periodic snapshots, not live quotes. Source dates are shown for reference. ThesisStreet consensus, scenarios, merits, risks, and invalidation triggers Thesis Summary CarMax is navigating a complex transition under its newly appointed CEO, Keith Barr, who has introduced a new 'Strategy for Growth' built on four pillars: Great Offering, Easy Experience, Add Value on Each Transaction, and Run Lean. While the company's Q1 FY2027 earnings beat consensus expectations due to strong cost controls and robust wholesale volumes, its core retail used vehicle segment remains under pressure. Retail unit sales are flat, comparable store sales are down 0.8%, and retail gross profit per unit (GPU) compressed by $230 year-over-year to $2,177. Although cost-cutting initiatives are on track to hit a $200 million exit-rate SG&A savings target by the end of FY2027, sustainable long-term value creation depends on a recovery in organic retail demand and stabilization of unit margins. Given the challenging macroeconomic backdrop of high interest rates and affordability constraints, a Hold rating is recommended until clear signs of durable, profitable retail unit growth emerge. This section is the 12-month view: analyst targets and the probability-weighted scenarios built from them. The intrinsic value at the top of this page answers a different question: what the business is worth today. Street view · analyst 12-month targets Low · most bearish analyst$33.00 Mean target$54.85 High · most bullish analyst$96.00 Street targets sit below today's price; our intrinsic value sits above it. Different horizons, different questions. Our research · scenarios, merits, risks, and invalidation triggersResearch as of 18 Sep 2026 Scenarios · 12-month scenario targets Bear CaseDownside scenario $33.0015% The bear case is driven by persistent macroeconomic headwinds, including elevated interest rates and eroding consumer confidence, which further depress retail used vehicle demand. Intense competition from digital-first players like Carvana forces CarMax to make deeper pricing concessions, compressing retail GPU below $2,100. At the same time, credit losses at CAF rise above expectations, requiring higher loan loss provisions that drag down finance income. Paused share repurchases limit capital return support, and the stock tests its technical price floor. Base CaseCentral scenario $54.8560% Matches the consensus meanThe base case projects a gradual stabilization of the used car market. Retail unit sales remain relatively flat to slightly positive, supported by competitive pricing actions, while wholesale volumes continue to do the heavy lifting. Retail GPU stabilizes around the $2,150 to $2,200 range as management dynamically manages pricing. SG&A cost savings materialize as planned, offsetting inflationary pressures and new store investments. CAF income remains stable with a net interest margin of approximately 6.5% for the remainder of the year. Valuation multiples remain slightly below historical averages, reflecting a cautious but constructive outlook. Bull CaseUpside scenario $96.0025% The bull case assumes a faster-than-expected recovery in consumer demand for used cars, driven by easing interest rates and improved affordability. Under this scenario, Keith Barr's strategic initiatives successfully accelerate retail unit growth, while the national rollout of the redesigned Extended Protection Plan (EPP) drives an incremental $35 per unit margin. Additionally, the company achieves its $200 million SG&A cost-reduction target ahead of schedule, leading to significant operating leverage. CarMax Auto Finance (CAF) continues to expand its Tier 2 lending penetration while maintaining stable credit losses, driving overall profitability back toward historical highs. Scenarios are anchored to street consensus at the research date, with our probabilities and rationale. Key Investment Merits
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All scenarios are estimates and subject to change. Past performance is not indicative of future results. Quality Pillars MembersThis section is available to registered members. Create a free account or sign in to unlock the full breakdown. Explore this dossierValuationIntrinsic value, the six-method breakdown, peer medians, and your assumptions sandbox.Financial SnapshotRevenue, profitability, returns, balance sheet, dividends, and the filing-level detail.Qualitative AnalysisBusiness overview, strategic initiatives, and mergers, acquisitions & partnerships.Outlook & Key DatesForward estimates, reporting calendar, and the monitoring framework. |