What Happened?
Shares of used automotive vehicle retailer Carmax (NYSE:KMX) jumped 8.8% in the pre-market session after the company reported impressive third-quarter earnings, which blew past analysts' revenue and EPS expectations. The CEO called out a "more stable environment for vehicle valuations," which is important for the business. Overall, this quarter had some key positives.
After the initial pop the shares cooled down to $85, up 4.5% from previous close.
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What The Market Is Telling Us
CarMax’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 8 months ago when the stock dropped 12.7% on the news that the company reported first quarter results with revenue and gross margin missing analysts' expectations, leading to an EPS miss. Furthermore, CarMax's management team pushed its goal of 2 million vehicles sold annually to 2026-2030, citing uncertainty in the recovery timing in the used car market. Overall, this was a mediocre quarter for CarMax.
CarMax is up 11.5% since the beginning of the year, and at $85 per share, it is trading close to its 52-week high of $87.20 from December 2024. Investors who bought $1,000 worth of CarMax’s shares 5 years ago would now be looking at an investment worth $860.41.
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