TLDR
- CarMax reports Q4 FY26 earnings before the bell on Tuesday, April 14.
- Wall Street expects EPS of $0.21, a 64% year-over-year drop, and revenue of $5.69 billion, down 5.2%.
- Options traders are pricing in a roughly 10.5% move in KMX stock post-earnings — nearly double the 5.72% average over the last four quarters.
- KMX stock is up 21% year-to-date, helped by a settlement with activist investor Starboard and two new independent directors.
- The average analyst price target of $37.15 implies around 20% downside from current levels.
CarMax has reached a settlement with Starboard Value and appointed two new independent directors ahead of Tuesday’s earnings report. Wall Street expects a tough quarter, with revenue forecast to fall 5.2% year-over-year to $5.69 billion and EPS expected to drop 64% to $0.21.
Despite the cautious outlook, KMX is up 21% year-to-date heading into the print.
The optimism comes largely from expectations around CEO Keith Barr’s turnaround plan. The strategy centers on cutting costs, improving efficiency, and drawing in buyers with more affordable inventory and targeted advertising. Starboard’s arrival added urgency, and many of the activist’s suggestions are reportedly factored into the plan.
Evercore analyst Greg Melich raised his price target on KMX to $45 from $40 while keeping a Hold rating. He expects used-unit comparable sales to be down 3.0% — slightly better than the FactSet consensus of a 3.5% decline. His EPS estimate of $0.21 reflects better comparable sales, partially offset by a more conservative gross profit per unit assumption. He believes CarMax had to “sharpen pricing to stabilize volume trends.”
William Blair’s Sharon Zackfia also holds a Hold rating. She expects a 3% revenue decline in Q4, based on flat retail average selling prices and a high-single-digit drop in wholesale revenue. Her EPS estimate of $0.21 reflects below-consensus projections for retail gross profit per unit and CarMax Auto Finance income.
Zackfia sees the sequential improvement in used-unit comparable sales — from a 9% decline in Q3 FY26 to an expected 2% drop in Q4 — as a “nice inflection point.” But she says questions remain about whether CarMax can fully recover its historical margins. She views KMX as fairly valued at 19 times her CY2026 earnings estimate.
Risks Remain Heading In
Neither analyst is turning bullish yet. Both cite high competition, cyclical headwinds, and execution risk as key concerns. CarMax has missed Wall Street’s revenue estimates multiple times over the past two years, and the bar — while low — hasn’t always been cleared.
Options traders are implying roughly a 10.53% move in either direction following the report. That’s well above the stock’s four-quarter average post-earnings move of 5.72%, which suggests the market sees real uncertainty here.
What Investors Are Watching
The key focus will be management’s commentary on turnaround execution and where demand is trending. Macroeconomic pressure and tariff uncertainty have pushed some consumers toward used vehicles over new ones, which could provide a modest tailwind.
The average analyst price target of $37.15 implies roughly 20% downside from the current price of around $46.79, suggesting the street still thinks the stock has run ahead of fundamentals.
🚨 Our April Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for April, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
