CarMax, Inc. (KMX)

CarMax's stock price has been impacted by several key events over the past six months. On September 25, 2025, the company reported its second-quarter fiscal year 2026 earnings, which fell short of analyst expectations, reporting sales declines across the board. Net earnings for Q2 were approximately $95.4 million, down from $132.8 million in the prior year. CarMax attributed these declines partly to a "pull forward" in demand into the first quarter due to speculation about tariffs. The company also reported an 11.2% decrease in income from its financing segment year-over-year, linked to a loan loss provision of $142.2 million for the quarter. Following this announcement, CarMax's stock price dropped by approximately 20% on September 25, 2025. Furthermore, effective October 31, 2025, CarMax will be removed from the S&P 500 index and added to the S&P SmallCap 600 index.

Demand for CarMax's products and services, particularly used vehicles, generally follows seasonal trends. Car values and demand tend to fluctuate, with peak demand typically observed in the spring or fall months. Conversely, the lowest demand for vehicles is often experienced during the winter months.

CarMax, Inc. is a leader in the automotive retail industry, focusing on the sale of used vehicles. The company operates within the consumer discretionary sector, specifically in the automotive retail and services industry. CarMax pioneered a no-haggle pricing model for used cars, aiming to provide a transparent and customer-centric experience. Its core business revolves around the retail sale and acquisition of used vehicles, and it offers related products and services, including extended protection plans, vehicle reconditioning and repair services, and automotive financing through its CarMax Auto Finance segment. The company's inventory encompasses a wide variety of used vehicles, including domestic, imported, luxury, hybrid, and electric models.

CarMax maintains an extensive national footprint across the United States, operating hundreds of retail locations. In addition to its physical stores, the company has a significant online presence, supported by an omni-channel retail strategy. CarMax's headquarters are located in Richmond, Virginia, and it has expanded its operational support with a technology innovation center in Dallas, Texas.

In the past year, CarMax's brand reputation has been affected by a securities fraud investigation and concerns regarding vehicle safety. A securities fraud investigation was announced following the company's Q2 2026 financial results, focusing on whether CarMax issued misleading statements about demand and its assessment of car loan risks. Additionally, CarMax has faced scrutiny over selling vehicles with unrepaired safety recall defects, with a report indicating that approximately 25% of vehicles offered for sale by CarMax in California had at least one such defect.

CarMax, Inc. has a diverse ownership structure comprising institutional, retail, and individual investors. Major institutional owners include Vanguard Group Inc., which holds 11.96% of the company's shares, BlackRock Inc. (7.38%), Diamond Hill Capital Management Inc. (4.74%), and State Street Corp. Other significant institutional holders include Janus Henderson Group Plc, Primecap Management Co/ca/, Aqr Capital Management Llc, and Geode Capital Management, Llc. Recent filings also show various institutional investors, such as Brighton Jones LLC and Y Intercept Hong Kong Ltd, acquiring new or increased positions in CarMax stock.