Stock Analysis | Carmax Outlook - Bearish Technicals Weigh Despite Mixed Analysts and Strong Fundamentals

Market Snapshot

Carmax (KMX) has slipped 2.31% recently, with bearish technical indicators and mixed analyst ratings creating a cautious environment. The internal diagnostic technical score is just 1.65, suggesting the stock is currently weak and best avoided.

News Highlights

• Walmart’s Agentic AI Strategy: Walmart unveiled a bold AI-driven retail future, aiming to launch autonomous personal shopping agents. This could signal a broader shift in consumer engagement and retail logistics, indirectly affecting used car retailers like Carmax.
• Nykaa’s Retail Expansion: India's Nykaa expanded its physical retail presence by 50 stores in Q4FY25. While this is a retail sector story, it highlights increasing investment in physical retail, which may influence consumer spending trends.
• Italy’s Retail Bond Demand: Italy's latest retail bond saw weak demand, reflecting cautious consumer sentiment in the region. Such macroeconomic trends can ripple across global markets, affecting consumer discretionary stocks like Carmax.

Analyst Views & Fundamentals

Analysts remain split on Carmax, with Evercore ISI Group giving a Buy rating on August 12 and JP Morgan issuing a Neutral on August 6. The simple average rating score is 3.50, while the weighted rating score is 5.45, indicating a moderate-to-positive outlook when weighted for historical performance.

Rating consistency is low, with Buy and Neutral ratings diverging. However, the weighted analyst score (5.45) is more optimistic than the current price trend of -2.31%.

Key Fundamental Factors

• Net profit growth (YoY): 38.91% – internal diagnostic score: 0
• Total profit growth (YoY): 221.58% – internal diagnostic score: 3
• Net cash flow from operating activities per share (YoY): 58.87% – internal diagnostic score: 2
• Price-to-Sales (PS): 1.90 – internal diagnostic score: 2
• Cash flow operating activities / Operating revenue: 3.64% – internal diagnostic score: 0

Overall, the fundamentals show strong profitability growth, but cash flow and sales multiples are weak. The internal fundamental score is 2.79, which is modest and in contrast with the better analyst expectations.

Money-Flow Trends

Despite a recent price decline, Carmax has seen mixed fund-flow patterns. The fund flow score is 7.82 (good), indicating positive inflows from medium and large investors. However, small and extra-large inflow ratios also show negative trends:

• Small investors: 49.06% inflow, but trend is negative
• Medium investors: 50.05% inflow, positive trend
• Large investors: 49.22% inflow, negative trend
• Extra-large investors: 49.94% inflow, negative trend

This suggests that while institutional investors are showing some confidence, retail and larger investors are withdrawing. The overall inflow ratio is 49.84%, which is neutral but trending downward.

Key Technical Signals

The technical outlook for Carmax is weak, with no bullish indicators and two bearish ones over the last 5 days:

• Williams %R Oversold: Internal diagnostic score of 1 (very weak), with a 37.88% win rate and -0.92% average return since 1966 signals.
• RSI Oversold: Internal diagnostic score of 2.29 (mildly bearish), with a 46.15% win rate and -1.39% average return since 13 signals.

Over the past 5 days (August 1-8, 2025), both indicators appeared simultaneously on August 1 and 4, with WR Oversold recurring on the 5th, 7th, and 8th. This consistent bearish signal suggests a weak short-term trend.

Key insights from the technical model: bearish signals are dominant (2 vs. 0), and momentum is deteriorating. The model advises avoiding the stock due to its weak chart pattern.

Conclusion

Carmax is in a tough technical position with a weak internal diagnostic score of 1.65, and recent chart patterns are bearish. While fundamentals are reasonably strong and analysts are cautiously optimistic, the price is down 2.31% and appears disconnected from the bullish themes.

Actionable takeaway: Investors may want to wait for a clearer breakout or improved technical setup before considering entry. For now, caution is warranted due to the fragile technical environment and mixed market signals.