| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 62 | 24.7x | 17.3x | Around median | |
Growth | 35 | 4.8% | 7.1% | Bottom tier | |
Quality | 43 | -1.0% | 4.5% | Around median | |
Safety | 41 | 16.4x | 2.6x | Around median | |
Capital Return | 74 | 0.00% | 0.06% | Top tier | |
Momentum | 74 | 30.3% | -1.6% | Top tier | |
Sentiment | 83 | 12 | 3 | Top tier |
10-year US Treasury yield 4.96% as of 2026-10-22. Estimates computed from company data and analyst targets, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
CarMax operates in used-vehicle retail and wholesale sales, combining digital channels and stores, alongside buyer financing through CarMax Auto Finance and the sale of extended protection products EPP. Its model generates profit from the vehicle, services, and financing associated with each transaction, with advertised, no-haggle pricing. In quarter 2 of fiscal year 2027 (ended 2026-08-31), it sold approximately 388,000 vehicles through retail and wholesale channels, up 15% compared with the same quarter of the previous year, while purchasing approximately 310,000 vehicles to replenish its inventory.
CarMax revenue in quarter 2 of fiscal year 2027 (ended 2026-08-31) reached 7.9 billion dollars, up 19.5% compared with the same quarter of the previous year, while net income reached 165.3 million dollars versus 95.4 million dollars in quarter 2 of fiscal year 2026 (ended 2025-08-31). Diluted earnings per share rose to 1.16 dollars versus 0.64 dollars in the comparison period, but gross margin declined to 10.1% versus 10.9%. The results reflect a clear balance between increasing sales volume and sacrificing some profit per vehicle to support price competitiveness.
Gross profit contributions in quarter 2 of fiscal year 2027 (ended 2026-08-31) consisted of 479 million dollars from used-vehicle retail sales, 138 million dollars from wholesale sales, and 183 million dollars from other activities, which benefited from protection products and services. Separately, CarMax Auto Finance income reached 136 million dollars, up 32% compared with the same quarter of the previous year. The sustainability of CarMax's improvement therefore depends on its ability to combine higher vehicle turnover, more profitable services, and disciplined credit underwriting.
Q2 FY2027 (2026-08)
Last 12 months to 2026-08-31
When: 2026-12-17
Year-over-year revenue growth at the 19.5% threshold in the expected earnings announcement
Gross margin at the 10.1% threshold in the expected earnings announcement
When: End of fiscal year 2027
The discounted cash flow model produces a value of 71 dollars, within a range of 39 dollars to 117 dollars, by measuring expected cash generation at a discount rate of 10.6% while following analysts' earnings estimates. The median target of 7 analysts is 63 dollars, within a range of 43 dollars to 74 dollars, reflecting their growth expectations, while the average target in the neutral consensus is 61 dollars. The industry-multiple valuation is 38 dollars, within a range of 21 dollars to 55 dollars, pricing next year's earnings at a median multiple of 12.9 across 18 comparable companies. The central value of the cash flow model and the median analyst target are closer to each other than to the industry-multiple valuation, because the first and second incorporate expectations of future performance, while the third links earnings to peer-company pricing. Analyst targets tend toward optimism and cash flow models toward conservatism across the comparison sample, but the cash flow model's result here exceeding the median target demonstrates that this general tendency does not determine the ranking of CarMax's results.
Figures in the text are as of 2026-10-19; the live price is shown at the top of the page.
In quarter 2 of fiscal year 2027 (ended 2026-08-31), used retail units rose 13.8% compared with the same quarter of the previous year, with higher volume offsetting part of the decline in gross profit per vehicle to 2,105 dollars. Profit from other activities also rose to 183 million dollars and CarMax Auto Finance income to 136 million dollars during the same quarter. Net income reached 165.3 million dollars versus 95.4 million dollars in quarter 2 of fiscal year 2026 (ended 2025-08-31), but continued growth requires maintaining this balance between volume and unit margin.
CarMax Auto Finance funded 2.3 billion dollars in new loans in quarter 2 of fiscal year 2027 (ended 2026-08-31), and its share of Tier 2 financing rose to 22% versus 10% in the same quarter of the previous year. This expands CarMax's ability to retain financing returns rather than assign the transaction to external lenders, but increases the importance of controlling underwriting and credit losses. Although CAF income during the quarter rose to 136 million dollars, management expects its income in fiscal year 2027 to be slightly below fiscal year 2026 (ended 2026-02-28), while targeting Tier 2 loan originations of approximately a billion dollars by the end of fiscal year 2027.
Automated analysis for informational purposes only — not investment advice.
Targeted savings at an annualized run rate of 200 million dollars
When: Fiscal year 2027
Targeted increase in EPP margin per unit of 35 dollars
According to EL7 data, operating cash flow for the last 12 months through 2026-08-31 reached approximately 1.6 billion dollars, versus net income of 292.4 million dollars, equivalent to 547% of it. Free cash flow as calculated by EL7 (operating cash flow minus capital expenditures) for the last 12 months reached 1.1 billion dollars. However, total debt according to EL7 data reached 17.4 billion dollars at the end of quarter 2 of fiscal year 2027 (ended 2026-08-31), versus 882.0 million dollars in cash and short-term investments, so managing financial leverage remains important even with strong cash flows. This comparison excludes long-term marketable securities and therefore does not constitute an assessment of overall liquidity.
CarMax uses advertised, no-haggle pricing, so management believes that requiring dealers to include fees in the price makes comparisons with its offers clearer. In quarter 2 of fiscal year 2027 (ended 2026-08-31), the proportion of its vehicles rated as great deals on Cars.com more than doubled compared with the same quarter of the previous year. Management estimated in the 2026-09-29 call that enforcement of FTC requirements contributed approximately half of comparable-store growth performance, but the scale of the sustainable benefit also depends on competitors' pricing responses.
The first test is continued sales growth while controlling the cost of price competition, following revenue growth of 19.5% compared with the same quarter of the previous year and a gross margin of 10.1% in quarter 2 of fiscal year 2027 (ended 2026-08-31). The second test is progress toward the target of 200 million dollars in annualized run-rate expense savings upon exiting fiscal year 2027. The quality of CarMax Auto Finance income also deserves attention, because its income in quarter 2 of fiscal year 2027 benefited from a 17 million dollar gain on sale and a 29 million dollar reduction in the provision for loan losses compared with the same quarter of the previous year.