Jul. 16 at 2:34 PM
$KMX
Watching closely. At
$65/share, CarMax would trade around 24x forward earnings based on current FY2027 EPS estimates (~
$2.70).
The biggest question is whether margins can actually recover to the levels the market is pricing in.
CarMax has faced pressure from used vehicle pricing changes, inventory valuation, and lower gross profit per vehicle. A return to stronger margins requires favorable vehicle acquisition costs, stable usedcar values, and improved consumer demand.
The risk is that earnings estimates are built around margin expansion that may not fully materialize. If CarMax only earns
$2.00-
$2.25 per share instead of the projected ~
$2.70, a 65 share price would represent roughly 30x earnings multiple. Thats high for a low growth used car dealership.
At these levels, the stock may be getting ahead of itself if the expected earnings recovery does not materialize.
Now I just need my 3 teenagers to want to drive.
