CarMax Earnings: Some Improvements Visible, but Recovery Has a Long Way to Go

CarMax stock declined over 11% on Sept. 28 after the company reported fiscal 2024 second-quarter diluted earnings per share of $0.75 that fell 5.1% year over year and missed the Refinitiv consensus of $0.78. We see no reason to change our fair value estimate because we continue to expect CarMax’s profit to improve from recent levels once used-vehicle affordability improves. Vehicle affordability will improve gradually over a long time due to poor late-model used-vehicle supply following the pandemic and chip shortage and some less affluent customers being unable or unwilling to pay higher interest rates than a few years ago.