KMX

The counterintuitive setup here is the whole story: CarMax gapped up ~7% despite a -38.6% GAAP EPS surprise because the miss was driven by a large non-cash, non-operating markdown on its Carvana equity stake (shares received from the Edmunds divestiture), not by the core retail business. Stripping that out, operations actually beat expectations — revenue grew roughly 8% to over $8 billion, comparable used unit sales accelerated to high single digits, and gross profit per unit held in the ~$2,300 range. Sell-side desks looked straight through the accounting noise and repriced the stock on the underlying operating momentum. Wall Street is essentially re-underwriting the CarMax turnaround narrative. After two sluggish years of affordability-strained demand, unit growth is re-accelerating, CarMax is taking used-vehicle market share as franchise dealers pull back, and SG&A leverage is improving as sales scale over a flattened cost base. The omnichannel/online penetration continues to build, which supports both volume and unit economics. CAF (captive finance) income has stabilized even with elevated loss provisions, and any future rate cuts ease both funding costs and consumer payment burdens — a lever many investors underappreciate. Technically, the gap pushed the stock back above its 10-day EMA and 50-day SMA ($59.46) while sitting ~25% above the 200-day ($47.99), confirming an intact uptrend. At roughly 17x forward earnings, KMX is not expensive against a re-accelerating EPS trajectory, and consistent buybacks (~1.5% annual share count reduction) compound the re-rating case. If the Carvana stake recovers, the very charge that dented GAAP EPS could reverse and provide a further optical and sentiment catalyst.

Analyzed by rerate-v2+glm-5.2 · Sep 29, 2026

Outcomes calculated Oct 7, 2026

Analysis updated Oct 7, 2026