CarMax (KMX) KMX Q2 Financial Results Summary
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CarMax (KMX) Q2 2027: Strong Revenue Growth and EPS Surge — Positive Outlook
CarMax, Inc. (NYSE: KMX) reported its second-quarter fiscal 2027 results, showcasing a robust performance that exceeded the prior year's figures. Total net revenues surged by $1.3 billion, or 19.5% year-over-year, reaching $7.9 billion. This growth reflects a significant rebound in both retail and wholesale unit sales, indicating a strong demand for used vehicles.
Key Financial Metrics:
- Total Net Revenues: $7.9 billion, up $1.3 billion or +19.5% YoY
- Combined Retail and Wholesale Unit Sales: 387,735 units, an increase of 14.7%
- Retail Used Unit Sales: 227,391 units, up 13.8%
- Net Earnings per Diluted Share: $1.16, an increase of $0.52 or +81.3% YoY
- SG&A Expenses: $628.6 million, up 4.6%
- CarMax Auto Finance (CAF) Income: $135.6 million, up 32.1%
This quarter's results are undoubtedly positive for shareholders. The substantial increase in revenue and net earnings per share (EPS) demonstrates CarMax's effective execution of its growth strategy, particularly in enhancing its pricing competitiveness and expanding its financing operations. The EPS growth of 81.3% is particularly noteworthy, reflecting not only improved sales but also operational efficiencies.
Operational Highlights:
- Gross Profit per Retail Used Unit: $2,105, down $111 YoY, indicating pricing actions to support sales.
- Wholesale Units Sold: 160,344, up 15.9% YoY.
- Extended Protection Plans (EPP) Margin per Retail Unit: $623, an increase of $46 per unit.
- Vehicles Bought from Consumers and Dealers: 310,107, up 5.9%.
Despite the decline in gross profit per unit, the overall increase in sales volume and the successful execution of cost management strategies have allowed CarMax to maintain profitability. The company has also indicated plans to resume share repurchases in the third fiscal quarter, which could further enhance shareholder value.
Strategic Initiatives:
CarMax's management highlighted the ongoing implementation of its "Shift into GEAR" strategy, which focuses on four pillars aimed at driving sustainable growth:
- Great Offering: Competitive pricing and improved inventory access.
- Easy Experience: Enhanced digital and in-store customer interactions.
- Add Value: Maximizing profitability across all business segments.
- Run Lean: Operational efficiencies to reduce costs.
The upcoming Strategic Update scheduled for November 3, 2026, will provide further insights into these initiatives and the company's growth trajectory.
Forward-Looking Catalysts:
Investors should closely monitor the developments from the Strategic Update and the impact of resumed share repurchases on stock performance. Additionally, the upcoming earnings release for the third quarter on December 17, 2026, will be critical in assessing the sustainability of CarMax's growth and profitability in the face of potential economic headwinds.
In conclusion, CarMax's second-quarter results reflect a strong recovery and a positive outlook for the remainder of the fiscal year. The combination of increased sales, improved financing operations, and strategic initiatives positions the company well for continued growth, making it an attractive prospect for investors.
Here are the extracted tables in Markdown format:
Note: The amounts in the following tables are in thousands/millions.
CONSOLIDATED STATEMENTS OF EARNINGS
| (In thousands) | Six Months Ended | August 31, 2026 | August 31, 2025 |
|---|---|---|---|
| Net earnings | $ 350,914 | $ 305,759 | |
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||
| Depreciation and amortization | $ 188,098 | $ 163,715 | |
| Share-based compensation expense | $ 74,304 | $ 71,255 | |
| Provision for loan losses | $ 208,975 | $ 243,904 | |
| Provision for cancellation reserves | $ 53,315 | $ 41,897 | |
| Deferred income tax (benefit) provision | - $ 12,620 | $ 42,424 | |
| Proceeds from sale of auto loans | $ 579,907 | $ — | |
| Other | - $ 39,899 | $ 1,393 | |
| Net (increase) decrease in: | |||
| Accounts receivable, net | - $ 19,484 | $ 15,177 | |
| Auto loans held for sale | - $ 106,541 | - $ 921,928 | |
| Inventory | $ 282,224 | $ 785,052 | |
| Other current assets | $ 28,762 | $ 6,331 | |
| Auto loans held for investment, net | - $ 564,434 | $ 612,649 | |
| Other assets | - $ 17,318 | - $ 13,889 | |
| Net decrease in: | |||
| Accounts payable, accrued expenses and other current liabilities and accrued income taxes | - $ 51,562 | - $ 230,470 | |
| Other liabilities | - $ 54,118 | - $ 38,232 | |
| NET CASH PROVIDED BY OPERATING ACTIVITIES | $ 900,523 | $ 1,085,037 | |
| INVESTING ACTIVITIES: | |||
| Capital expenditures | - $ 180,442 | - $ 268,204 | |
| Proceeds from disposal of property and equipment | $ 253 | $ 348 | |
| Purchases of investments | - $ 3,373 | - $ 5,765 | |
| Sales and returns of investments | $ 2,780 | $ 1,155 | |
| Principal payments received on beneficial interests | $ 10,524 | $ — | |
| NET CASH USED IN INVESTING ACTIVITIES | - $ 170,258 | - $ 272,466 | |
| FINANCING ACTIVITIES: | |||
| Proceeds from issuances of long-term debt | $ 3,073,100 | $ 87,000 | |
| Payments on long-term debt | - $ 3,621,987 | - $ 94,955 | |
| Cash paid for debt issuance costs | - $ 11,162 | - $ 13,279 | |
| Payments on finance lease obligations | - $ 8,442 | - $ 7,105 | |
| Issuances of non-recourse notes payable | $ 6,742,859 | $ 6,848,169 | |
| Payments on non-recourse notes payable | - $ 6,849,158 | - $ 6,911,012 | |
| Repurchase and retirement of common stock | - $ 2,621 | - $ 384,873 | |
| Equity issuances | $ 83 | $ 8,349 | |
| NET CASH USED IN FINANCING ACTIVITIES | - $ 677,328 | - $ 467,706 | |
| Increase in cash, cash equivalents, and restricted cash | $ 52,937 | $ 344,865 | |
| Cash, cash equivalents, and restricted cash at beginning of year | $ 862,850 | $ 960,310 |
