Why CarMax Stock Just Crashed
Key Points
CarMax beat on earnings this morning -- sort of.
Non-GAAP profits were better than expected, but according to GAAP, CarMax actually lost money in Q4.
- 10 stocks we like better than CarMax ›
Shares of used-car megastore chain CarMax (NYSE: KMX) tumbled 15.6% through 1 p.m. ET Tuesday, despite beating on both the top and bottom lines in its Q4 2026 earnings report this morning.
Heading into the report, analysts forecast CarMax to earn $0.18 per share, non-GAAP, on sales of $5.65 billion. CarMax actually earned $0.34 per share on sales of $5.95 billion.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Getty Images.
CarMax Q4 earnings
CarMax sold 0.7% fewer vehicles retail last quarter, and 3% more wholesale, resulting in a 1% decline in total revenue -- an improvement from the 1.8% decline for all of fiscal 2026.
Profitability suffered, with gross profit falling more than 9%. On the bottom line, the company reported a non-GAAP loss (as noted above), but its earnings calculated under generally accepted accounting principles (GAAP) were negative -- an $0.85 per share loss for the quarter, the opposite of what one would expect with non-GAAP profit being reported as positive, and thus perhaps a shock to investors.
Full-year, CarMax still booked a GAAP profit of $1.68 per share, however, this was barely half the $3.21 per share the company earned in fiscal 2025.
What's next for CarMax stock
Worse news for investors is that CarMax says it is cutting prices to spur sales growth, which may help the company beat analyst forecasts for near-zero sales growth this year -- but could weigh on future profits. Given that analysts were already anticipating earnings would decline in fiscal 2027, it appears the company's price-cutting strategy could result in an even steeper-than-expected earnings decline.
Granted, the stock doesn't look terribly expensive today at a P/E ratio of 16. Without earnings growth, though, even a mid-teens P/E ratio might be too much to pay for CarMax stock.
Should you buy stock in CarMax right now?
Before you buy stock in CarMax, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and CarMax wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $556,335!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,160,572!*
Now, it’s worth noting Stock Advisor’s total average return is 975% — a market-crushing outperformance compared to 193% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of April 14, 2026.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CarMax. The Motley Fool has a disclosure policy.
Recommended Articles
