CarMax Makes The Most Of Booming Used Car Market, Stock Soars

CarMax Inc. KMX shares climbed on Friday after the used car giant delivered better-than-expected first-quarter earnings and revenue, driven by strong retail sales and improved margins.

The Richmond, Virginia-based used car retailer registered earnings per share of $1.38, beating the analyst consensus estimate of $1.21. Quarterly sales of $7.55 billion outpaced the analyst consensus estimate of $7.47 billion.

Retail used unit sales rose by 9.0%, while comparable store used unit sales grew by 8.1%. Wholesale unit sales also saw a modest increase of 1.2%.

Also Read: CarMax Loan Delinquencies Tick Higher In May, Signaling Renewed Credit Strain

Combined retail and wholesale used vehicle unit sales were 379,727, an increase of 5.8% from the prior year’s first quarter.

Total gross profit increased 12.8% to $893.6 million, driven by higher unit volumes and strong unit margin performance. Gross margin expanded to 11.8% from 11.1% in the year-ago period.

The company achieved a gross profit of $2,407 per retail used unit, up $60 per unit.

Gross profit per wholesale unit remained historically strong at $1,047, though it declined by $17 per unit.

The company purchased a total of 336,000 vehicles from consumers and dealers, marking a 7.2% increase. This included 288,000 vehicles bought from consumers, up 3.3%, and 48,000 acquired through dealers, up 38.4%.

CarMax Auto Finance income decreased 3.6% to $141.7 million as an increase in the provision for loan losses outweighed growth in CAF’s net interest margin percentage.

This quarter’s provision for loan losses was $101.7 million compared to $81.2 million in the prior year’s first quarter.

In the first quarter, the company repurchased 3.0 million shares for $199.8 million, with $1.74 billion remaining under its buyback authorization as of May 31, 2025.

In the quarter under review, the firm opened two new stand-alone reconditioning/auction centers. The centers are located in El Mirage, Arizona, supporting the Phoenix metro market, and Midlothian, Texas, supporting the Dallas metro market.

The company exited the quarter with cash and equivalents worth $262.819 million, compared with 246.960 million at the end of February 28.

Long-term debt (excluding the current portion) at the end of the quarter was $1.366 billion, contracting from $1.570 billion at the end of February 28.

PriceAction: KMX shares are trading higher by 10.27% to $71.23 premarket at last check Friday.

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