CarMax Stock Got Clobbered 17% in One Day. Is the Stock a Buy Now?

Core Viewpoint - CarMax's stock experienced a significant decline following weaker-than-expected earnings, but the current valuation may present a buying opportunity as the price-to-earnings (P/E) ratio has dropped to a one-year low [1]. Financial Performance - CarMax reported a substantial 81% increase in earnings per share (EPS) year-over-year, reaching $0.58, although this fell short of analyst expectations of$0.66 [3]. - Net revenue rose by 6.7% to $6 billion, with retail used unit sales increasing by 6.2$2,322, indicating improved per-vehicle metrics [5]. Market Position - In 2024, CarMax captured a 3.7% share of the nationwide market for used vehicles aged 0 to 10, operating in a highly fragmented market [5]. - Online retail sales accounted for 15% of retail unit sales, with online transactions generating approximately 29% of total revenue [6]. Industry Context - The impact of tariffs on new vehicles may drive consumers towards used cars, potentially benefiting CarMax as prices for new vehicles rise [8]. - Analysts have expressed confidence in CarMax despite the earnings miss, with some upgrading their ratings based on the company's sales momentum and profit growth [9].