CarMax (KMX) Q2 Earnings: How Key Metrics Compare to Wall Street Estimates

CarMax (KMX) reported Q2 revenue of $6.59 billion, a 6% year-over-year decline, and EPS of $0.64, both significantly missing analyst consensus estimates of $7.05 billion and $1.03, respectively. The company also underperformed expectations across key operational metrics, including a -7.1% comparable store used vehicle sales change against a 1.5% estimate and lower-than-anticipated used vehicle average selling prices and gross profit per unit, indicating broader weakness in its core business. This substantial earnings miss and operational underperformance likely contributed to the stock's recent -8.1% return, significantly trailing the S&P 500.

Analysis

CarMax reported a significant earnings disappointment for its second quarter ending August 2025, with substantial misses on both top and bottom lines. Revenue of $6.59 billion marked a 6% year-over-year decline and fell 6.52% short of the Zacks Consensus Estimate. More critically, EPS of $0.64 was down from $0.85 a year prior and represented a severe -37.86% surprise compared to the $1.03 consensus. The underlying weakness stems directly from its core operations, as evidenced by a concerning -7.1% year-over-year drop in comparable store used vehicle sales, a stark reversal from the 1.5% growth analysts had projected. This points to a sharp deterioration in consumer demand. The miss was broad-based, with used vehicle net sales falling 7.2% year-over-year to $5.27 billion, well below the $5.78 billion estimate. Profitability was also squeezed, with gross profit per used vehicle at $2,216, missing the $2,294 forecast. Ancillary revenue streams provided no relief; third-party finance fees posted a net loss of $0.8 million, a -157.1% year-over-year swing, while extended protection plan revenues also declined and missed estimates. The only minor bright spots were a slight beat in gross profit per wholesale unit and growth in advertising revenue, but these were insufficient to offset the widespread underperformance. The stock's -8.1% return over the past month, against the S&P 500's +2.7% gain, reflects the market's pricing-in of this fundamental weakness.

Key Decisions for Investors

• Given the substantial miss on revenue, EPS, and a severe 7.1% decline in comparable store sales, investors should exercise extreme caution as this signals a sharp deterioration in consumer demand and core business health.
• The negative swing in third-party finance fees and the miss on gross profit per unit are key red flags for margin compression, warranting close monitoring in subsequent quarters for any signs of stabilization.
• Considering the stock's significant recent underperformance, this deeply negative report could justify further downside, making it prudent to reassess long positions until there is clear evidence of a turnaround in the used vehicle market.