CarMax Gears Up For Q2 Print; Here Are The Recent Forecast Changes From Wall Street's Most Accurate Analysts

CarMax (KMX) is scheduled to release its Q2 earnings on Thursday, Sept. 25, with analysts anticipating EPS of $1.03 on $7.02 billion in revenue, following a strong Q1 performance driven by robust retail sales. Shares closed down 0.9% at $57.60 on Tuesday, while recent analyst ratings present a mixed outlook with price targets ranging from $65 to $84.

Analysis

CarMax (KMX) is approaching its second-quarter earnings release with consensus estimates pointing to a significant divergence between top-line and bottom-line performance. Analysts anticipate quarterly earnings to grow approximately 21% year-over-year to $1.03 per share, while revenue is expected to remain flat at $7.02 billion. This forecast implies a heavy reliance on margin expansion to drive profitability, a trend that was evident in the company's better-than-expected first quarter, which was driven by strong retail sales and improved margins. Despite this positive earnings outlook, analyst sentiment is mixed, reflecting underlying uncertainty about the sustainability of this model. While Wedbush and Stephens & Co. maintain bullish Outperform/Overweight ratings with price targets of $84 and $81 respectively, JP Morgan and Mizuho hold Neutral ratings. The most recent analyst action from JP Morgan on September 18 involved raising its price target to $65, which, while an increase, is substantially below the bullish targets and highlights the wide dispersion in valuation views. With the stock recently closing at $57.60, it trades below all cited price targets, setting up a potentially volatile reaction to the upcoming report.

Key Decisions for Investors

• Investors should closely monitor whether CarMax delivers on the expected 21% EPS growth and provides evidence of sustained margin improvement, as this is the primary driver of the bull case.
• Pay close attention to the stagnant revenue forecast; any weakness in reported revenue or negative commentary on unit sales volume could overshadow an EPS beat and signal fundamental demand issues.
• Given the mixed analyst ratings and the wide range of price targets from $65 to $84, it may be prudent to await the earnings results and management's forward guidance to gain clarity on the outlook before initiating or adding to a position.