CarMax: Tariffs Support Q1 But Credit Headwinds Persist (Upgrade)

Jun. 20, 2025 11:47 AM ETCarMax, Inc. (KMX) StockALLY, KMX
Seeking Profits
4.63K Followers
(10min)

Summary

  • CarMax delivered a strong Q1 beat, driven by higher volumes and record margins, but some gains may be temporary due to tariff pull forward.
  • Financing profits remain pressured by rising credit losses, and I expect ongoing provisioning to weigh on future earnings.
  • CarMax shares now trade near my fair value target, reflecting a balanced risk/reward after recent underperformance and improved cost controls.
  • Given persistent headwinds but limited downside, I move from Sell to Hold—KMX stock is likely a market performer, not an outperformer.

A CarMax office building in Houston, TX, USA.

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CarMax Overview

Coming into this morning’s quarterly earnings report, shares of CarMax, Inc. (NYSE:KMX) have been a poor performer, losing about 10% of their value, and sitting near a 52-week low. The company has struggled with higher prices weighing

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