Core Insights - CarMax, Inc. (KMX) is set to release its fourth-quarter fiscal 2025 results on April 10, with earnings estimated at 64 cents per share and revenues at $5.97 billion [1] - The earnings per share estimate has increased by 2 cents over the past 60 days, indicating a 100% rise compared to the previous year, while revenue is expected to grow by 6.14% year-over-year [2] Financial Performance - In the third quarter of fiscal 2025, CarMax reported adjusted earnings of 81 cents per share, exceeding the Zacks Consensus Estimate of 62 cents and up from 52 cents a year ago [3] - Revenues for the third quarter were $6.22 billion, surpassing the Zacks Consensus Estimate of $5.99 billion and reflecting a 1.2% increase from the same quarter last year [3] Strategic Developments - CarMax is the leading used car retailer in the U.S., benefiting from a strong nationwide presence and logistics network [4] - The company plans to open five new stores in fiscal 2025, including smaller cross-functional locations, and has made strategic acquisitions, such as Edmunds, to enhance its digital capabilities [4] Revenue Projections - Estimated revenues from used vehicle sales for the upcoming quarter are projected at $4.58 billion, representing a year-over-year growth of 1.8% [5] - Wholesale vehicle sales are expected to generate $892 million, indicating a 0.9% increase, while other revenues are estimated at $168.5 million, reflecting an 8.9% growth [5] Earnings Expectations - CarMax has a positive Earnings ESP of +2.44%, suggesting a likelihood of beating earnings estimates [6][7] - The company currently holds a Zacks Rank of 3 (Hold), which, combined with the positive Earnings ESP, enhances the probability of an earnings beat [7]

Group 1 - CarMax Inc is set to report its fourth-quarter results on April 10, with analysts expecting earnings of 64 cents per share, indicating a 100% increase from the same quarter last year [1] - The stock has experienced a year-to-date decline of 9.3%, but was up 0.5% at $74.09, aiming to end a three-day losing streak [1] - Historically, CarMax has shown a positive post-earnings trend, finishing higher after six of its last eight reports, with an average move of 7% over the past two years [2] Group 2 - The options market indicates a heightened interest in CarMax, with a 10-day call/put volume ratio of 3.16, ranking higher than 98% of readings from the past year [3] - The current options pricing suggests a larger expected swing of 14.5% following the earnings report, compared to the historical average [2] - There is a potential risk of a negative post-earnings move leading to an unwinding of the current optimism in the options market [3]

Core Insights - CarMax has been recognized as one of the 100 Best Companies to Work For in 2025, marking its 21st consecutive year on this prestigious list, ranking 69 overall [1][2] - The recognition is based on employee feedback, with over 1.3 million U.S. employees surveyed to assess workplace satisfaction [2] - CarMax has received additional accolades, including "Best Workplaces in Retail," "Most Innovative Companies," and recognition as a "Military Friendly Employer" [3] Company Overview - CarMax is the largest retailer of used cars in the U.S., having sold approximately 770,000 used vehicles and 550,000 wholesale vehicles during the fiscal year ending February 29, 2024 [4] - The company originated over $8 billion in receivables through CarMax Auto Finance in fiscal 2024, contributing to a total portfolio exceeding $17 billion [4] - CarMax operates over 245 store locations and employs nearly 30,000 associates [4] Employee Benefits - CarMax offers competitive pay and benefits, including immediate 401(k) eligibility with a 6% match, wellness benefits, paid time off, and tuition reimbursement [5] - Employees also receive discounts on car purchases, which can extend to family members, and access to wellness programs like gym discounts and Headspace for mindfulness [5]

Core Points - CarMax has been named one of the 100 Best Companies to Work For in 2025, marking the 21st consecutive year on this list, ranking 69 [1] - The recognition is based on employee feedback, with over 1.3 million U.S. employees surveyed by Great Place to Work [2] - CarMax has received additional accolades, including "Best Workplaces in Retail" and "Most Innovative Companies" [3] Company Overview - CarMax is the largest retailer of used cars in the U.S., selling approximately 770,000 used vehicles and 550,000 wholesale vehicles in the fiscal year ending February 29, 2024 [4] - The company originated over $8 billion in receivables through CarMax Auto Finance during fiscal 2024, contributing to a portfolio exceeding $17 billion [4] - CarMax operates over 245 store locations and employs nearly 30,000 associates [4] Employee Benefits - CarMax offers competitive pay and benefits, including discounts on car purchases for family members, immediate 401(k) eligibility with a 6% match, wellness benefits, and comprehensive medical plans [5] - Additional benefits include tuition reimbursement, adoption assistance, and an employee stock purchase plan [5]

Core Insights - The used car market is undergoing significant changes influenced by consumer preferences, technology, and economic factors, with CarMax and Carvana representing contrasting business models and trajectories [1] Group 1: Carvana's Performance - Carvana's stock has shown signs of recovery following a strong earnings report, with a revenue increase of 46% to $3.54 billion and a gross profit rise of 90% to $763 million [2][3] - The company reported a net income of $159 million and an adjusted EBITDA margin of 10.1%, indicating a shift towards profitability [3] - Analysts are optimistic about Carvana's future, projecting a stock price increase to a consensus range of $260 - $265, suggesting a healthy upside from its current price [3] Group 2: CarMax's Position - CarMax is preparing for its fourth-quarter earnings call amid significant market changes, with analysts maintaining a Hold rating and an average price target of $90.82, indicating a potential upside of 17.48% from its current price of $77.31 [6][7][8] - The company is implementing omnichannel initiatives to enhance customer experience, particularly targeting younger demographics who prefer remote shopping and flexible delivery options [9] Group 3: Business Models and Strategies - CarMax operates primarily through physical locations, which provides a reliable customer service experience but incurs higher overhead costs, while Carvana focuses on a fully online model emphasizing convenience [10] - Carvana's recovery is attributed to improved logistics, integration with ADESA, cost-cutting measures, and AI-powered customer service tools, enhancing operational efficiency [4][5] - CarMax is focusing on sustainable profitability and adapting its infrastructure to meet evolving consumer preferences, contrasting with Carvana's initial aggressive expansion strategy [12] Group 4: Market Dynamics - The potential for tariffs in the used car market could impact both companies, as rising new car prices may drive customers towards used vehicles, although market conditions can change rapidly [13] - Carvana presents a riskier but potentially more rewarding investment opportunity due to its growth potential, while CarMax offers stability and consistent profitability through its established business model [14] Group 5: Future Outlook - The success of both companies will depend on their ability to adapt to the changing used car market and effectively execute their respective strategies, with each serving different customer segments [15]

Partnership Overview - Angel City Football Club (ACFC) has announced a partnership with CarMax, the largest retailer of used cars in the U.S., designating CarMax as a Founding Partner and Official Used Auto Retailer [1] - The partnership aims to focus on community impact, particularly supporting youth sports programs in the Los Angeles area, enhancing fan engagement, and offering special promotions on game days [1][2] Community Impact Initiatives - CarMax will support the "Essentials" pillar of ACFC's commitment to Equity, Essentials, and Education, which includes providing monetary funds for youth sports access [2] - The partnership will feature the Angel City Camps Series, consisting of ten weeks of youth soccer camps serving approximately 500 kids across the greater LA region [2] Event Sponsorships - CarMax will be the Presenting Partner for ACFC's annual Season Ticket Member Event, one Title Night each season, and will provide select fans with free parking for each match [3] CarMax's Commitment to Women's Sports - CarMax has a history of championing integrity and transparency in the automotive industry and has increased its investment in women's sports partnerships since 2020 [4] - The company is also a multi-year partner with the National Women's Soccer League (NWSL) and has committed to increasing Shield bonuses over the last three years [5] Angel City Football Club Overview - ACFC, entering its fourth season in 2025, is based in Los Angeles and competes in the National Women's Soccer League [6] - The club is valued at $250 million, making it the world's most valuable women's sports team [6] CarMax Overview - In the fiscal year ending February 29, 2024, CarMax sold approximately 770,000 used vehicles and 550,000 wholesale vehicles, with over $8 billion in receivables originated through CarMax Auto Finance [8] - CarMax operates over 245 store locations and has been recognized for 20 consecutive years as one of the Fortune 100 Best Companies to Work For® [8]

Core Insights - CarMax is hosting in-person hiring events for automotive technicians and service professionals in 12 cities on February 20, 2025, from 10:00 a.m. to 7:00 p.m. local time [1] - The company is looking to fill various positions, including technicians, detailers, painters, and supply associates, to support its operations and a new reconditioning and auction center in El Mirage, AZ [1][2] - On-the-spot job offers and sign-on bonuses up to $7,500 are available for some positions, with compensation varying by location and experience [2] Hiring Events - The hiring events will take place in cities including El Mirage, AZ; Carrollton, GA; Norcross, GA; Kennesaw, GA; Duarte, CA; Laurel, MD; Sterling, VA; Garland, TX; Virginia Beach, VA; Smithtown, NY; Puyallup, WA; and Savannah, GA [4] - Interested candidates can RSVP and find more information at carmaxautotech.com, and online applications are also accepted at careers.carmax.com [3] Employee Benefits - CarMax offers competitive pay and benefits, including discounts on car purchases for employees and their family members, immediate 401(k) eligibility with a 6% match, wellness benefits, paid time off, comprehensive medical plans, tuition reimbursement, and an employee stock purchase plan [4] - The company emphasizes a supportive work culture and career growth opportunities for associates [3][4] Community Engagement - CarMax partners with TechForce Foundation to support students pursuing automotive careers through the CarMax Scholarship Fund, which assists with tuition and attendance expenses [6] - The company has been recognized for its commitment to technicians and has received multiple awards for being a top workplace, including being named one of FORTUNE magazine's 100 Best Companies to Work For® for 20 consecutive years [7] Company Overview - CarMax is the largest retailer of used cars in the U.S., selling approximately 770,000 used vehicles and 550,000 wholesale vehicles during the fiscal year ending February 29, 2024 [8] - The company originated over $8 billion in receivables through CarMax Auto Finance, contributing to a portfolio exceeding $17 billion [8] - CarMax operates over 245 store locations and employs nearly 30,000 associates [8]

Group 1 - Momentum investing focuses on "buying high and selling higher" rather than traditional "buying low and selling high" strategies [1] - Fast-moving trending stocks can lose momentum if their future growth does not justify their high valuations, leading to potential downside risks for investors [2] - A safer investment strategy involves identifying bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score [3] Group 2 - CarMax (KMX) is highlighted as a strong candidate for momentum investing, with a recent price increase of 4.3% over the past four weeks [4] - KMX has shown a significant price gain of 15.5% over the past 12 weeks, indicating strong momentum, with a beta of 1.71, suggesting it moves 71% more than the market [5] - KMX has a Momentum Score of B, indicating a favorable time to invest, and it has a Zacks Rank 2 (Buy) due to positive earnings estimate revisions [6][7] Group 3 - KMX is trading at a Price-to-Sales ratio of 0.50, suggesting it is undervalued, as investors pay only 50 cents for each dollar of sales [7] - The stock has significant potential for further price appreciation, supported by its fast-paced momentum characteristics [8] - There are additional stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, providing further investment opportunities [8]

Financial Performance - CarMax reported net sales and operating revenues of $6,223.4 million for the third quarter of fiscal 2025, a 1.2% increase year-over-year, while total revenues for the first nine months were $20,350.3 million, reflecting a 2.7% decrease [124]. - Gross profit for the third quarter was $677.6 million, up 10.6% from the previous year, and for the first nine months, it reached $2,230.0 million, a 4.8% increase [124]. - Used vehicle sales for the three months ended November 30, 2024, reached $4,888.9 million, a 1.2% increase from $4,832.1 million in the same period of 2023 [138]. - Total net sales and operating revenues for the nine months ended November 30, 2024, decreased by 2.7% to $20,350.3 million from $20,909.4 million in 2023 [138]. - Interest and fee income for the three months ended November 30, 2024, was $469.2 million, a 10.6% increase from $426.9 million in 2023 [180]. - Total interest margin increased to 6.2% for both the third quarter and first nine months of fiscal 2025, up from 5.9% and 6.0% in the respective periods of fiscal 2024 [183]. Vehicle Sales and Inventory - Used vehicle unit sales totaled 184,243 in the third quarter, a 5.4% increase, while total used unit sales for the first nine months were 606,395, up 2.2% [124]. - The company purchased approximately 270,000 vehicles during the third quarter, a 7.9% increase from the prior year, with over half of consumer purchases made through the online appraisal experience [132]. - Used vehicle unit sales increased by 5.4% to 184,243 units in the three months ended November 30, 2024, compared to 174,766 units in 2023 [139]. - Total inventory as of November 30, 2024, was $3.67 billion, a decrease of $12.9 million compared to the start of the fiscal year [190]. CarMax Auto Finance (CAF) - CarMax Auto Finance (CAF) income was $159.9 million for the third quarter, a 7.6% increase, and $422.4 million for the first nine months, showing a slight increase of 0.3% [124]. - As of November 30, 2024, CAF serviced approximately 1.1 million customer accounts within a $17.76 billion portfolio of managed receivables, financing 42.8% of retail used vehicle unit sales in the first nine months of fiscal 2025 [120]. - CAF's managed portfolio aims for cumulative net losses in the 2% to 2.5% range over the life of the loans, with actual performance potentially varying based on economic conditions [172]. - The allowance for loan losses as a percentage of ending managed receivables decreased to 2.70% as of November 30, 2024, from 2.92% in 2023 [182]. Cost Management and Efficiency - The company is focusing on cost efficiencies, targeting savings of approximately $200 per retail unit, with half of these savings already realized [131]. - SG&A expenses increased by $15.8 million, or 2.8%, in Q3 FY2025, with SG&A as a percentage of gross profit improving by 6.4% [164][165]. - SG&A expenses increased by $119.4 million, or 7.0%, in the first nine months of FY2025, with a 2.9% increase when excluding a prior year legal settlement [166]. Expansion and Strategic Initiatives - CarMax aims to achieve annual sales of over 2 million combined retail and wholesale units between fiscal 2026 and fiscal 2030, extending the timeframe due to market uncertainties [135]. - CarMax plans to open two additional stores and one stand-alone auction facility by the end of the fiscal year, continuing its expansion strategy [135]. - The company opened 1 new used car store in the three months ended November 30, 2024, bringing the total to 248 stores [144]. Debt and Financial Position - As of November 30, 2024, total debt amounted to $18.70 billion, a slight decrease from $18.78 billion as of February 29, 2024 [198]. - Cash and cash equivalents were reported at $271.91 million, down from $574.14 million in the previous period [198]. - Non-recourse notes payable related to asset-backed term funding transactions totaled $13.16 billion, with an additional $3.94 billion from warehouse facilities as of November 30, 2024 [201]. - The company has $2.16 billion of unused capacity in its warehouse facilities as of November 30, 2024 [201]. Market Outlook and Risks - The company anticipates that fourth quarter fiscal 2025 results will exceed those of the third quarter, supported by improved comparable store used unit sales [145]. - The company cautions that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations [206].

Group 1 - The stock of CarMax (KMX) has shown a significant price momentum, gaining 12.6% over the past 12 weeks, indicating strong investor interest [5][10] - KMX has a favorable Momentum Score of A, suggesting it is an opportune time for investors to enter the stock to capitalize on its momentum [11] - The stock is currently trading at a reasonable valuation with a Price-to-Sales ratio of 0.51, meaning investors pay only 51 cents for each dollar of sales [12] Group 2 - KMX has a beta of 1.71, indicating that it moves 71% higher than the market in either direction, reflecting its fast-paced momentum [9] - The upward trend in earnings estimate revisions has contributed to KMX earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [6] - The 'Fast-Paced Momentum at a Bargain' screen identifies KMX as a stock that is both fast-moving and attractively priced, making it a strong candidate for investment [8][13]