CarMax (KMX) Q4 Earnings: Adjusted Beat Amid Challenges and Strategic Shifts
Key Takeaways
- CarMax reported Q4 net loss per diluted share of $0.85, impacted by $0.99 non-cash goodwill impairment and $0.20 restructuring charges; adjusted EPS of $0.34 beat Zacks Consensus Estimate of $0.22 by 57.63%.
- Net sales and operating revenues of $5.95 billion, down 1% YoY but exceeded estimates by 3.01%.
- Retail used vehicle units sold fell 0.8% to 181,188; comparable store sales down 1.9%; gross profit per retail used unit declined $207 to $2,115 due to pricing actions.
- CarMax Auto Finance (CAF) income down 9.8% to $143.7 million; provision for loan losses rose to $73.9 million.
- Full FY2026 net earnings per diluted share $1.68, down from $3.21; revenues $25.88 billion, down 1.8%.
- Targeting $200 million in SG&A exit-rate savings by end of FY2027; capex ~$400 million planned for FY2027.
Earnings Context and Why This Report Matters
As the largest U.S. used vehicle retailer, CarMax (KMX) has navigated a tough fiscal 2026 environment shaped by high interest rates, affordability issues, and intense pricing competition. The Q4 results, for the period ended February 28, 2026, underscore the company's pivot to more aggressive pricing, digital improvements, and cost discipline aimed at rebuilding sales momentum. From what I see, retail unit sales improved sequentially but stayed negative year-over-year, while one-time charges masked the underlying story. This earnings release stands out in the broader auto sector's volatility, offering a window into consumer demand, inventory handling, and KMX's route back to profitability via operational tweaks.
Breaking Down the Reported Numbers
CarMax (KMX) recorded net sales and operating revenues of $5.95 billion in Q4 fiscal 2026, down 1% from $6.01 billion a year ago, yet beating the Zacks Consensus Estimate of $5.77 billion. Net loss per diluted share came in at $0.85, compared to earnings of $0.58 in the prior year, driven by a $141.3 million non-cash goodwill impairment ($0.99 per share) tied to market cap drops and financial strains, along with $0.20 per share in restructuring charges. On an adjusted basis, EPS of $0.34 topped the $0.22 consensus by 57.63%.
Retail used units reached 181,188, a 0.8% decline year-over-year, with comparable store sales off 1.9%; wholesale units, however, climbed 3% to 122,781. Total gross profit dropped 9.4% to $605.3 million (10.2% margin versus 11.1% last year), reflecting a $207 decrease in retail used gross profit per unit to $2,115 as pricing moves worked to stimulate demand. CarMax Auto Finance (CAF) income fell 9.8% to $143.7 million, with loan loss provisions rising to $73.9 million. SG&A expenses hit $611.3 million but adjusted down 5.4% year-over-year.
For the full FY2026, revenues totaled $25.88 billion (down 1.8%), net EPS was $1.68 (versus $3.21 previously), and retail units stood at 780,684 (down 1.3%). While no formal EPS or revenue guidance was provided, the outlook points to ongoing GPU pressure, expanding EPP margins, and a $200 million SG&A savings goal.
Market Reaction and What Investors Are Focusing On
Even with the adjusted EPS and revenue beats, KMX shares dropped sharply after the release, declining about 15% on April 14, 2026, following 6%+ pre-market losses and continued slides during the session. Investors zeroed in on the net loss, year-over-year sales dip, ongoing unit sales softness, and margin squeezes from pricing strategies, which overshadowed highlights like cost-cutting targets and improving sales trends. In my view, this reflects broader caution around near-term profitability in a challenging used vehicle market.
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Looking Ahead: Priorities and Metrics to Track
Management highlighted key strategies like boosting affordability through dynamic pricing, wider vehicle choices, and digital enhancements to lift traffic and close rates. They noted Q4 sales trends strengthened sequentially, thanks to price cuts, marketing pushes, and app upgrades, making retail comps less negative than in earlier quarters.
On costs, they’re aiming for $200 million in SG&A exit-rate savings by the end of FY2027 (raised from $150 million), with a shift to per-unit measures excluding restructuring impacts. Capex is pegged at around $400 million for FY2027, supporting 4 new stores, 2 reconditioning/auction centers, and 2 auction sites. Share repurchases were paused in Q4, but a $1.3 billion authorization lingers, with leverage targeted at 1.50-2.00x net leverage ratio.
CAF stays central, hitting 42.8% penetration in Q4 (up year-over-year); the focus is on prime Tier 2 credit alongside full-spectrum underwriting progress. One thing that stands out for me is monitoring retail GPU trends (likely to mirror Q4’s year-over-year drop), EPP margins (ramping with about $35 more per unit), loan loss provisions, vehicle sourcing from consumers and dealers, and inventory in this economic backdrop. The Q1 FY2027 results, ending May 31, 2026, and due June 17, will be key to gauging if sales momentum holds.
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KMX in downward trend: price dove below 50-day moving average on April 14, 2026
KMX moved below its 50-day moving average on April 14, 2026 date and that indicates a change from an upward trend to a downward trend. In of 51 similar past instances, the stock price decreased further within the following month. The odds of a continued downward trend are .
Technical Analysis (Indicators)
Bearish Trend Analysis
The 10-day RSI Indicator for KMX moved out of overbought territory on April 14, 2026. This could be a bearish sign for the stock. Traders may want to consider selling the stock or buying put options. Tickeron's A.I.dvisor looked at 28 similar instances where the indicator moved out of overbought territory. In of the 28 cases, the stock moved lower in the following days. This puts the odds of a move lower at .
The 10-day moving average for KMX crossed bearishly below the 50-day moving average on April 22, 2026. This indicates that the trend has shifted lower and could be considered a sell signal. In of 17 past instances when the 10-day crossed below the 50-day, the stock continued to move higher over the following month. The odds of a continued downward trend are .
Following a 3-day decline, the stock is projected to fall further. Considering past instances where KMX declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 58 cases where KMX's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on May 07, 2026. You may want to consider a long position or call options on KMX as a result. In of 92 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
The Moving Average Convergence Divergence (MACD) for KMX just turned positive on May 07, 2026. Looking at past instances where KMX's MACD turned positive, the stock continued to rise in of 43 cases over the following month. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where KMX advanced for three days, in of 311 cases, the price rose further within the following month. The odds of a continued upward trend are .
KMX may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to consistent earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. KMX’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is slightly overvalued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (0.961) is normal, around the industry mean (33.682). P/E Ratio (23.756) is within average values for comparable stocks, (36.594). Projected Growth (PEG Ratio) (0.412) is also within normal values, averaging (0.845). KMX has a moderately low Dividend Yield (0.000) as compared to the industry average of (0.032). P/S Ratio (0.228) is also within normal values, averaging (218.496).
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating weak sales and an unprofitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating that the returns do not compensate for the risks. KMX’s unstable profits reported over time resulted in significant Drawdowns within these last five years. A stable profit reduces stock drawdown and volatility. The average Profit vs. Risk Rating rating for the industry is 81, placing this stock worse than average.
Industry description
Market Cap
High and low price notable news
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Fundamental Analysis Ratings
The average fundamental analysis ratings, where 1 is best and 100 is worst, are as follows
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General Information
a holding company whose subsidiaries sell and finance used motor vehicles
Industry AutomotiveAftermarket
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