CarMax Inc. (KMX) Stock Surges After Smashing Q1 Earnings—Wall Street Left Scratching Heads

Used cars just drove right past the analysts' lowball estimates—again.

KMX bulls are grinning as shares rev up post-earnings, proving once more that the market's crystal ball is about as reliable as a 2003 Kia transmission.

No guidance? No problem. When you beat expectations by a country mile, who needs pesky forward-looking statements anyway?

Another quarter, another victory lap for the undisputed heavyweight of pre-owned rides. Meanwhile, short sellers are busy Googling 'how to short Tesla instead.'

TLDR

• CarMax Q1 earnings per share rose to $1.38, beating the $1.16 analyst estimate.

• Revenue increased 6.1% to $7.55 billion, slightly above Wall Street forecasts.

• Same-store sales climbed 8.1% as used-car demand grew amid tariff concerns.

• CarMax expanded AI tools, improving efficiency and lowering costs.

• Stock rose over 5% after results; analysts maintain a “buy” consensus.

CarMax Inc. (NYSE: KMX) stock traded at 5.83% to $68.08 as of writing, following its announcement of stronger-than-expected first-quarter results for the period ending May 31, 2025.

CarMax, Inc. (KMX)

The company’s performance outpaced Wall Street forecasts on both earnings and revenue, supported by higher used-car demand amid tariff-related market uncertainty.

Earnings Surpass Analyst Expectations

CarMax reported quarterly earnings of $210.38 million, or $1.38 per share, significantly higher than the $0.97 per share reported in the same period last year. This result comfortably topped the average analyst estimate of $1.16 per share, marking the company’s fourth consecutive quarter of positive retail comparable sales and double-digit earnings growth.

CarMax, $KMX, Q1-26. Results:
🟢 +7% Pre-Market

📊 Adj. EPS: $1.38 🟢
💰 Revenue: $7.55B 🟢
📈 Net Income: $210M
🔎 Retail used unit sales grew 9%, driving record gross profit per used unit and fourth straight quarter of positive comps. pic.twitter.com/UbPLxOBrXq

— EarningsTime (@Earnings_Time) June 20, 2025

Revenue climbed 6.1% year-over-year to $7.55 billion, surpassing the consensus forecast of $7.51 billion. Growth was driven by rising used-car sales volumes, offsetting a slight decline in average selling prices. Same-store sales increased by a strong 8.1%, with total retail used vehicle unit sales up 9% to 230,210 units.

Tariff Concerns Boost Used-Car Demand

Chief Executive Bill Nash highlighted that demand for used cars picked up in late March and surged through April, the company’s strongest month of the fiscal quarter. Tariff uncertainty prompted more buyers to opt for used vehicles, supporting both retail and wholesale sales growth. CarMax sold nearly 380,000 vehicles across all channels in the quarter, representing a 5.8% increase from the prior year.

While used vehicle prices slipped 1.5% to an average of $26,120, and wholesale prices edged down 1.7% to $7,959, the higher volume offset these modest price declines. Gross profit ROSE 12.8% to $893.6 million, bolstered by record gross profit per retail unit of $2,407.

Artificial Intelligence Enhances Operations

CarMax expanded its use of artificial intelligence to streamline operations. The company introduced an AI-powered VIRTUAL assistant that delivered a 30% improvement in the chatbot containment rate. Finance Chief Enrique Mayor-Mora emphasized the potential for AI to drive further cost efficiency and revenue growth across the business.

Despite the strong operational results, CarMax Auto Finance (CAF) saw income dip 3.6% to $141.7 million due to higher loan-loss provisions, though its net interest margin improved. The company also accelerated its share buyback program, repurchasing $199.8 million worth of stock. As of May 31, CarMax had $1.74 billion remaining under its repurchase authorization.

Outlook and Analyst Sentiment

Looking ahead, CarMax expects continued sales growth and market share expansion. The stock is down 5.7% over the past year but gained sharply after the earnings report. Analysts maintain a “buy” consensus, with 12 out of 18 giving a “strong buy” or “buy” rating. The median 12-month price target stands at $81.00.