📊 KMX Key Takeaways
Is Carmax Inc. (KMX) a Good Investment?
CarMax faces a fundamental profitability crisis with EPS collapsing 47.7% YoY, revenue stagnating at 0% growth, and negative free cash flow of -$85.7M indicating the company is burning cash. Compounding this deterioration, excessive leverage at 2.87x debt-to-equity combined with anemic returns (ROE 3%, ROA 0.7%) and thin margins (2.3% net) create acute financial distress risk, particularly if operating performance continues to decline.
Fundamentals are weakening: revenue was flat while diluted EPS fell 47.7%, indicating significant pressure on earnings quality and profitability. High leverage, minimal cash generation, and negative free cash flow outweigh the company's positive gross profit and current-ratio liquidity.
Carmax Inc. Key Strengths (KMX)
- Current ratio of 2.70x provides short-term liquidity cushion
- Company maintains positive operating cash flow of $17.6M
- Still generating positive net income of $185.6M despite challenges
- Positive net income of $185.63M despite a challenging operating environment
- Current ratio of 2.70x indicates adequate coverage of near-term obligations
- Gross margin remained positive at 10.7%
KMX Stock Risks: Carmax Inc. Investment Risks
- Catastrophic free cash flow burn of -$85.7M; company is destroying cash
- EPS plummeting 47.7% YoY with revenue flat indicates severe operational deterioration
- Dangerous leverage of 2.87x debt-to-equity with only $132.2M cash against $17.6B long-term debt creates solvency risk
- Razor-thin net margin of 2.3% leaves no buffer for cyclical downturns in automotive retail
- Quick ratio of 0.82x reveals heavy inventory dependence; illiquid asset base
- Diluted EPS declined 47.7% year over year despite flat revenue
- Long-term debt of $17.56B and debt-to-equity of 2.87x create substantial leverage risk
- Free cash flow was negative $85.75M with operating cash flow of only $17.59M
Key Metrics to Watch
- Free cash flow trend—must return to positive territory to avoid balance sheet stress
- EPS trajectory—current 47.7% decline is unsustainable; watch for stabilization
- Debt service coverage—operating cash flow inadequate relative to debt obligations
- Gross margin sustainability—10.7% is already compressed; further erosion signals competitive weakness
- Revenue growth—0% growth with deteriorating profitability is a lethal combination
- Free cash flow and operating cash flow conversion
- EPS growth and net margin
Carmax Inc. (KMX) Financial Metrics & Key Ratios
💡 AI Analyst Insight
Strong liquidity with a 2.70x current ratio provides a solid financial cushion.
KMX Profit Margin, ROE & Profitability Analysis
KMX vs Automotive Sector: How Carmax Inc. Compares
How Carmax Inc. compares to Automotive sector averages
Sector benchmarks are approximate industry averages. Actual sector performance may vary.
Is Carmax Inc. Stock Overvalued? KMX Valuation Analysis 2026
Based on fundamental analysis, Carmax Inc. shows some fundamental concerns relative to the Automotive sector in 2026.
Note: This is a fundamental analysis based on SEC filings. For P/E ratio, price targets, and market-based valuation, consult financial data providers. This is not investment advice.
Carmax Inc. Balance Sheet: KMX Debt, Cash & Liquidity
KMX Revenue & Earnings Growth: 5-Year Financial Trend
5-Year Trend Summary: Carmax Inc.'s revenue has declined by 17% over the 5-year period, indicating business contraction. The most recent EPS of $3.02 reflects profitable operations.
KMX Revenue Growth, EPS Growth & YoY Performance
KMX Quarterly Earnings & Performance
| Quarter | Revenue | Net Income | EPS |
|---|---|---|---|
| Q1 2027 | $7.5B | $185.6M | $1.31 |
| Q3 2026 | $5.8B | $62.2M | $0.43 |
| Q2 2026 | $6.6B | $95.4M | $0.64 |
| Q1 2026 | $7.1B | $152.4M | $0.97 |
| Q3 2025 | $6.1B | $82.0M | $0.52 |
| Q2 2025 | $7.0B | $118.6M | $0.75 |
| Q1 2025 | $7.1B | $152.4M | $0.97 |
| Q3 2024 | $6.1B | $37.6M | $0.24 |
Data sourced from SEC EDGAR 10-Q quarterly filings. Figures may represent quarterly or cumulative values.
Carmax Inc. Dividends, Buybacks & Capital Allocation
KMX SEC Filings: Latest 10-K & 10-Q Analysis
Access official SEC EDGAR filings for Carmax Inc. (CIK: 0001170010)
📋 Recent SEC Filings
❓ Frequently Asked Questions about KMX
What is the AI rating for KMX?
Carmax Inc. (KMX) has a Combined AI Grade of C from Claude (D) and ChatGPT (C) with 86% combined confidence, based on fundamental analysis of SEC EDGAR filings.
What are KMX's key strengths?
Claude: Current ratio of 2.70x provides short-term liquidity cushion. Company maintains positive operating cash flow of $17.6M. ChatGPT: Positive net income of $185.63M despite a challenging operating environment. Current ratio of 2.70x indicates adequate coverage of near-term obligations.
What are the risks of investing in KMX?
Claude: Catastrophic free cash flow burn of -$85.7M; company is destroying cash. EPS plummeting 47.7% YoY with revenue flat indicates severe operational deterioration. ChatGPT: Diluted EPS declined 47.7% year over year despite flat revenue. Long-term debt of $17.56B and debt-to-equity of 2.87x create substantial leverage risk.
What is KMX's revenue and growth?
Carmax Inc. reported revenue of $8.0B.
Does KMX pay dividends?
Carmax Inc. does not currently pay dividends.
Where can I find KMX SEC filings?
Official SEC filings for Carmax Inc. (CIK: 0001170010) including 10-K, 10-Q, and 8-K reports are available on SEC EDGAR.
What is KMX's EPS?
Carmax Inc. has a diluted EPS of $1.31.
How is the AI analysis conducted?
Two independent AI systems — Claude (Anthropic) and ChatGPT (OpenAI) — analyze SEC EDGAR filings including 10-K annual reports and 10-Q quarterly reports. Each AI evaluates financial health, profitability ratios, balance sheet strength, and growth metrics. The combined grade reflects both perspectives for balanced insights.
What is KMX's fundamental grade?
Based on our AI fundamental analysis in August 2026, Carmax Inc. has a C grade with 86% confidence. Review the strengths and risks sections above for full context. This is not investment advice.
Is KMX stock overvalued or undervalued?
Valuation metrics for KMX: ROE of 3.0% (sector avg: 12%), net margin of 2.3% (sector avg: 6%). Compare these metrics with sector averages to assess valuation.
What is KMX's AI grade for 2026?
Our dual AI analysis gives Carmax Inc. a combined C grade for 2026. Revenue is data pending, with profitability at or below sector average. Always conduct your own research.
What is KMX's free cash flow?
Carmax Inc.'s operating cash flow is $17.6M, with capital expenditures of $103.3M. FCF margin is -1.1%.
How does KMX compare to other Automotive stocks?
Vs Automotive sector averages: Net margin 2.3% (avg: 6%), ROE 3.0% (avg: 12%), current ratio 2.70 (avg: 1.2).
Is Carmax Inc. carrying too much debt?
KMX has a debt-to-equity ratio of 2.87x, which is above the Automotive sector average of 1x. However, the current ratio of 2.70 suggests adequate short-term liquidity.