Carmax 2026 Q1 Earnings Strong Performance as Net Income Surges 38%

Carmax (KMX) reported its fiscal 2026 Q1 earnings on June 19th, 2025. The company demonstrated robust financial performance, with earnings per share (EPS) surpassing the analyst estimate of $1.21. Carmax's strategic efforts and operational excellence continue to drive impressive growth. Looking ahead, the company anticipates sustained expansion, leveraging its omni-channel platform and diverse business operations. Carmax aims to enhance customer experience and increase market share by capitalizing on its technological and digital capabilities.

Revenue

The total revenue of Carmax increased by 6.1% to $7.36 billion in 2026 Q1, up from $6.93 billion in 2025 Q1.

Earnings/Net Income

Carmax's EPS rose 42.3% to $1.38 in 2026 Q1 from $0.97 in 2025 Q1, marking continued earnings growth. Meanwhile, the company's profitability strengthened with net income of $210.38 million in 2026 Q1, marking 38.0% growth from $152.44 million in 2025 Q1. Overall, the EPS reflects a strong performance.

Post-Earnings Price Action Review

The investment strategy of purchasing Carmax shares following a quarter experiencing a revenue drop and holding them for 30 days proved to be underwhelming. The strategy resulted in a compounded annual growth rate of -11.16%, with an overall return of -29.71% and an excess return of -88.77%. This approach also experienced a maximum drawdown of -50.55%, highlighting significant risk and negative returns. The Sharpe ratio of -0.27 further indicated an unfavorable risk-to-reward balance, suggesting that investors might need to reconsider this strategy given its historical performance.

CEO Commentary

Bill Nash, President and Chief Executive Officer of CarMax, emphasized the company's fourth consecutive quarter of positive retail comparable sales and double-digit year-over-year earnings per share growth. He highlighted that the results underscore the strength of CarMax's earnings growth model, driven by their omni-channel experience, diverse business operations, and focus on execution. Nash noted that the integration of associates, technology, and digital capabilities positions CarMax to enhance the customer experience and continue gaining market share, thereby driving significant year-over-year earnings growth in the future.

Guidance

CarMax anticipates continued growth stemming from its expanded CarMax Auto Finance (CAF) non-prime funding program, which aims to enhance penetration across the full spectrum of financing options while managing risk. The company expects its strategic efforts to support ongoing sales growth and market share gains, fostering significant year-over-year earnings growth in the coming years.

Additional News

Recently, CarMax announced an acceleration in its share repurchase program. During the first quarter of fiscal 2026, the company repurchased nearly 3.0 million shares of its common stock for approximately $199.8 million. This move signifies CarMax's commitment to returning value to its shareholders. Moreover, CarMax opened two new stand-alone reconditioning and auction centers in El Mirage, Arizona, and Midlothian, Texas, enhancing its operational infrastructure and supporting regional markets. These initiatives reflect CarMax's strategic focus on expanding its footprint and capabilities to drive future growth.