What Happened?
Shares of used automotive vehicle retailer Carmax (NYSE: KMX) jumped 5.8% in the afternoon session after the company reported impressive fiscal first-quarter 2026 results, which beat analysts' same-store sales and gross margin expectations. This led to nice EPS outperformance versus Wall Street's estimates. Growth was driven by a ramp in volumes of retail used and wholesale vehicles sold. Overall, this was a solid quarter, showing management is executing as expected.
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What The Market Is Telling Us
CarMax’s shares are not very volatile and have only had 7 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 2 months ago when the stock dropped 19.8% on the news that the company reported underwhelming Q1 2025 (fiscal Q4 2025) results. Its EBITDA missed significantly and its EPS fell short of Wall Street's estimates.
More troubling, the company suspended its long-term growth guidance, citing macroeconomic uncertainty, a move that signaled management's reduced visibility and confidence in the future growth trajectory. Overall, this quarter could have been better.
CarMax is down 16% since the beginning of the year, and at $68.26 per share, it is trading 23.5% below its 52-week high of $89.19 from February 2025. Investors who bought $1,000 worth of CarMax’s shares 5 years ago would now be looking at an investment worth $726.48.
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