What are the investment strengths of CarMax Inc (KMX)?

Trading at 0.96x book and 11.4x P/E vs industry 20.8x median - deep value if margins normalize. EPS of 3.41 TTM shows profitability exists below operating line via interest income (490M). Scale advantage with 26.4B revenue (6x industry median) and 4.4B PP&E creates barriers; FCF positive at 685M TTM despite operating losses.

What are the investment risks for CarMax Inc (KMX)?

Operating losses (-234M TTM) with 3.1x leverage creates refinancing risk. Interest expense (889M) consuming all EBITDA (1.9B) leaves no margin for error. 5-year EPS growth of -18.6% vs industry +10.6% median shows structural decline. Gross margin 11.2% vs 35.4% industry median limits pricing power.

CarMax Inc

KMX

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CarMax Inc AI Insights

Informational only. Not investment advice.

As of 2025-12-09

Snapshot

Operating margin TTM is -0.9% vs industry median +3.0% - core business unprofitable despite 26.4B revenue scale[Operating Margin TTM]
Debt/equity of 3.09x with 19.1B total debt vs 6.2B equity; interest expense (889M TTM) exceeds operating income[Debt to Equity]
P/B ratio of 0.96x - trading below book value signals market pricing in structural impairment or earnings decline[Price to Book Ratio]

Watch Triggers

Operating Margin TTM: Turns positive (>0%) — Would signal turnaround in core business; currently -0.9% vs +3% industry median
Interest Expense TTM: Declines below 700M — At 889M, interest consumes 47% of EBITDA; reduction unlocks profitability
Change in Inventory: Turns negative (destocking) — +475M inventory build either converts to sales or becomes write-down risk

Bull Case

Trading at 0.96x book and 11.4x P/E vs industry 20.8x median - deep value if margins normalize. EPS of 3.41 TTM shows profitability exists below operating line via interest income (490M).

P/B RatioP/E RatioInterest Income

Scale advantage with 26.4B revenue (6x industry median) and 4.4B PP&E creates barriers; FCF positive at 685M TTM despite operating losses.

Total Revenue TTMFree Cash Flow TTMPP&E

Bear Case

Operating losses (-234M TTM) with 3.1x leverage creates refinancing risk. Interest expense (889M) consuming all EBITDA (1.9B) leaves no margin for error.

Operating Income TTMDebt to EquityInterest Expense TTM

5-year EPS growth of -18.6% vs industry +10.6% median shows structural decline. Gross margin 11.2% vs 35.4% industry median limits pricing power.

EPS Growth 5yrGross Margin TTM

Bull vs Bear Balance

AI-generated sentiment analysis based on fundamental metrics and market conditions.

35%

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Forward Thesis

Interest burden will compress net income further unless rates decline or debt is refinanced

1-3yhigh

889M TTM interest expense vs -234M operating income
18.3B long-term debt at elevated rates
FCF of 685M insufficient to meaningfully delever

Interest expense 889M TTM exceeds EBIT of -234MNet debt 18.1B vs market cap 5.8BFCF margin only 2.6% TTM

Inventory build (+475M) signals either demand weakness or strategic positioning for recovery

3-12mmed

Change in inventory +475M TTM
Working capital increased 383M
Gross margin 11.2% below industry median 35.4%

Inventory 3.1B vs 540M cashGross margin 11.2% vs 35.4% medianAsset turnover 0.97x near industry median

Valuation Context

Caveats

Public Strategies Rankings

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KMX Fundamentals

Wholesale Trade → Merchant Wholesalers, Durable Goods

Metric	Value	YoY Growth	Industry Percentile
Market Cap	$6.01B		—
Enterprise Value	$23.65B		—
P/E Ratio	14		—
Total Revenue - TTM	$25.94B	-0.1%	—
Earnings Per Share (diluted) - TTM	$3.05	+3.7%	—
Operating Margin - TTM	-1.27%	-0.2%	—
Net Margin - TTM	1.77%	-0.0%	—
Free Cash Flow - TTM	$1.95B	+477.4%	—
Return on Common Equity - TTM	7.46%	-0.1%	—
Beta 5Y (Monthly)	unknown		—

KMX Dividend History

No dividends

KMX Stock Splits

1 stock split

03/27/070.5:1 split

KMX SEC Filings

Filing Date	Report Date	Report Type	Filing Link
12/23/25	11/30/25	10-Q	0001170010-25-000131
09/26/25	08/31/25	10-Q	0001170010-25-000118
06/26/25	05/31/25	10-Q	0001170010-25-000083
04/11/25	02/28/25	10-K	0001170010-25-000024
01/07/25	11/30/24	10-Q	0001170010-25-000004
09/27/24	08/31/24	10-Q	0001170010-24-000130
06/27/24	05/31/24	10-Q	0001170010-24-000087
04/15/24	02/29/24	10-K	0001170010-24-000034
01/05/24	11/30/23	10-Q	0001170010-24-000002
09/29/23	08/31/23	10-Q	0001170010-23-000114
06/26/23	05/31/23	10-Q	0001170010-23-000065
04/13/23	02/28/23	10-K	0001170010-23-000010
01/06/23	11/30/22	10-Q	0001170010-23-000006
09/30/22	08/31/22	10-Q	0001170010-22-000097
06/27/22	05/31/22	10-Q	0001170010-22-000063
04/14/22	02/28/22	10-K	0001170010-22-000017
01/06/22	11/30/21	10-Q	0001170010-22-000004
10/01/21	08/31/21	10-Q	0001170010-21-000179
06/28/21	05/31/21	10-Q	0001170010-21-000116
04/20/21	02/28/21	10-K	0001170010-21-000053
01/06/21	11/30/20	10-Q	0001170010-21-000003
10/05/20	08/31/20	10-Q	0001170010-20-000176
07/01/20	05/31/20	10-Q	0001170010-20-000131
04/21/20	02/29/20	10-K	0001170010-20-000033
01/07/20	11/30/19	10-Q	0001170010-20-000002
10/04/19	08/31/19	10-Q	0001170010-19-000148
07/03/19	05/31/19	10-Q	0001170010-19-000133
04/19/19	02/28/19	10-K	0001170010-19-000040
01/08/19	11/30/18	10-Q	0001170010-19-000004
10/05/18	08/31/18	10-Q	0001170010-18-000175
07/05/18	05/31/18	10-Q	0001170010-18-000146
04/24/18	02/28/18	10-K	0001170010-18-000054
01/04/18	11/30/17	10-Q	0001170010-18-000007
10/05/17	08/31/17	10-Q	0001170010-17-000162
07/07/17	05/31/17	10-Q	0001170010-17-000121
04/21/17	02/28/17	10-K	0001170010-17-000053
01/06/17	11/30/16	10-Q	0001170010-17-000008
10/06/16	08/31/16	10-Q	0001170010-16-000213
07/07/16	05/31/16	10-Q	0001170010-16-000170
04/22/16	02/29/16	10-K	0001170010-16-000117
01/07/16	11/30/15	10-Q	0001170010-16-000056
10/08/15	08/31/15	10-Q	0001170010-15-000028
07/08/15	05/31/15	10-Q	0001170010-15-000014
04/24/15	02/28/15	10-K	0001170010-15-000008
01/08/15	11/30/14	10-Q	0001170010-15-000002
10/08/14	08/31/14	10-Q	0001170010-14-000032
07/08/14	05/31/14	10-Q	0001170010-14-000025
04/25/14	02/28/14	10-K	0001170010-14-000017
01/08/14	11/30/13	10-Q	0001170010-14-000003
10/07/13	08/31/13	10-Q	0001170010-13-000022
07/09/13	05/31/13	10-Q	0001170010-13-000018
04/26/13	02/28/13	10-K	0001170010-13-000010
01/09/13	11/30/12	10-Q	0001170010-13-000002
10/10/12	08/31/12	10-Q	0001170010-12-000005
07/06/12	05/31/12	10-Q	0001193125-12-296272
04/25/12	02/29/12	10-K	0001193125-12-182512
01/09/12	11/30/11	10-Q	0001193125-12-006617
10/07/11	08/31/11	10-Q	0001193125-11-266280
07/11/11	05/31/11	10-Q	0001170010-11-000054
04/28/11	02/28/11	10-K	0001170010-11-000026
01/07/11	11/30/10	10-Q	0001170010-11-000002
10/12/10	08/31/10	10-Q	0001170010-10-000065
07/12/10	05/31/10	10-Q	0001170010-10-000044
04/27/10	02/28/10	10-K	0001170010-10-000032
01/11/10	11/30/09	10-Q	0001170010-10-000002
10/08/09	08/31/09	10-Q	0001170010-09-000047
07/09/09	05/31/09	10-Q	0001170010-09-000031
04/24/09	02/28/09	10-K	0001170010-09-000018
01/08/09	11/30/08	10-Q	0001170010-09-000002
10/09/08	08/31/08	10-Q	0001170010-08-000080
07/10/08	05/31/08	10-Q	0001170010-08-000058
04/25/08	02/29/08	10-K	0001170010-08-000043
01/09/08	11/30/07	10-Q	0001140361-08-000875
10/09/07	08/31/07	8-K	0001170010-07-000067
07/06/07	05/31/07	10-Q	0001170010-07-000057
04/27/07	02/28/07	10-K	0001170010-07-000042
01/08/07	11/30/06	3	0001140361-06-017737
08/31/06	08/31/06	Unknown	--
07/10/06	05/31/06	10-Q	0001170010-06-000051
05/12/06	02/28/06	8-K	0001170010-06-000018
11/30/05	11/30/05	Unknown	--
10/07/05	08/31/05	10-Q	0001170010-05-000147
07/11/05	05/31/05	8-K	0001170010-05-000069
05/13/05	02/28/05	10-K	0001193125-05-106899
01/07/05	11/30/04	10-Q	0001170010-05-000002
08/31/04	08/31/04	Unknown	--
05/31/04	05/31/04	Unknown	--
05/14/04	02/29/04	10-K	0001193125-04-088404
01/13/04	11/30/03	10-Q	0001170010-04-000001
08/31/03	08/31/03	Unknown	--
07/15/03	05/31/03	10-Q	0001170010-03-000048
05/29/03	02/28/03	ARS	9999999997-03-021911
01/14/03	11/30/02	10-Q	0001170010-03-000003
10/15/02	08/31/02	10-Q	0000104599-02-000005
05/31/02	05/31/02	Unknown	--
02/28/02	02/28/02	Unknown	--
11/30/01	11/30/01	Unknown	--
08/31/01	08/31/01	Unknown	--
05/31/01	05/31/01	Unknown	--
02/28/01	02/28/01	Unknown	--
11/30/00	11/30/00	Unknown	--
08/31/00	08/31/00	Unknown	--
05/31/00	05/31/00	Unknown	--
02/29/00	02/29/00	Unknown	--