CarMax, Inc. KMX reported second-quarter fiscal 2027 earnings of $1.16 per share, which increased 81.3% year over year and beat the Zacks Consensus Estimate of 68 cents by 70.6%. Revenues increased 19.5% to $7.88 billion, surpassing the consensus mark of $7.06 billion by 11.5%.
Results benefited from strong retail and wholesale volumes, higher vehicle pricing and CarMax Auto Finance growth. Retail used-unit sales increased 13.8%, while comparable-store used-unit sales advanced 13%.
CarMax, Inc. Price, Consensus and EPS Surprise
CarMax, Inc. price-consensus-eps-surprise-chart | CarMax, Inc. Quote
KMX Sales Rise on Higher Volumes and Pricing
For the quarter ended Aug. 31, 2026, used vehicle sales increased 19.7% year over year to $6.31 billion. Total retail used vehicle unit sales rose 13.8% to 227,391. The average retail selling price increased 6.3%, or approximately $1,600 per unit, to $27,623.
CarMax bought 310,107 vehicles from consumers and dealers, up 5.9%. Purchases from consumers were flat at 262,570 vehicles, while dealer purchases surged 53.7% to 47,537. Digital capabilities supported 81% of retail unit sales, with omni sales representing 68% and online retail sales accounting for 13%.
CarMax Wholesale Business Maintains Momentum
Wholesale vehicle sales increased 18.2% year over year to $1.36 billion. Wholesale unit sales climbed 15.9% to 160,344, while the average wholesale selling price increased 1.8% to $8,036.
Wholesale vehicle gross profit was nearly flat at $137.6 million, as higher volumes were offset by weaker unit economics. Gross profit per wholesale unit declined by $135 to $858, highlighting the margin pressure accompanying stronger sales activity.
KMX Margins Reflect Competitive Pricing Actions
Total gross profit increased 11.4% year over year to $799.5 million. Retail used vehicle gross profit rose 8.1% to $478.6 million, driven by higher volume. However, gross profit per used unit declined by $111 to $2,105 as KMX continued pricing actions to support sales trends.
Other gross profit rose 33.1% to $183.3 million. Extended Protection Plan margin dollars increased $26.5 million, supported by higher volume and a $46 rise in margin per retail unit to $623. Service margin improved $22 million, primarily reflecting cost-of-sales efficiency gains and leverage from unit growth.
CarMax Cost Control Drives SG&A Leverage
Selling, general and administrative expenses increased 4.6% year over year to $628.6 million. Despite the increase, SG&A per total unit fell $157, or 8.8%, to $1,621, reflecting leverage from the sharp rise in unit sales.
Ongoing cost-reduction efforts were partly offset by the annualization of materially reduced incentive-based compensation in the prior-year period and variable costs associated with higher volumes. Savings from reductions in field and corporate payroll provided an offset. CarMax remains on track to achieve $200 million in targeted SG&A exit-rate savings by the end of fiscal 2027.
KMX Finance Arm Posts Strong Income Growth
CarMax Auto Finance income increased 32.1% year over year to $135.6 million, aided by a lower provision for loan losses. The provision declined to $113.4 million from $142.2 million. CAF also recorded a $16.6 million gain on the sale of auto loans and benefited from $6.1 million in servicing income.
CAF financed 40.9% of units sold after three-day payoffs, down from 42.6% a year earlier. However, it financed 22% of Tier 2 volume compared with 10% in the prior-year quarter. The total interest margin remained unchanged at 6.6%, while the weighted average contract rate increased 60 basis points to 11.8%.
CarMax Plans to Resume Share Repurchases
KMX ended the quarter with cash and cash equivalents of $170.5 million and inventory of $3.85 billion. Long-term debt, excluding the current portion, totaled $1.66 billion. The company generated $900.5 million in net cash from operating activities during the first six months of fiscal 2027.
CarMax did not repurchase shares during the quarter but plans to resume buybacks at a modest level in the third quarter. It had $1.31 billion remaining under its authorization as of Aug. 31, 2026. KMX currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Key Releases From Auto Space
General Motors Company GM reported second-quarter 2026 adjusted earnings of $3.57 per share, up 41.3% year over year. The figure beat the Zacks Consensus Estimate of $3.13 by 14.06%. Revenues increased 1.9% to $48.03 billion and surpassed the consensus estimate of $46.56 billion by 3.15%. Strong pricing, lower costs and disciplined incentives supported results. General Motors raised its full-year adjusted EBIT guidance to $14-$16 billion from $13.5-$15.5 billion. Adjusted earnings are now projected at $12-$14 per share, up from the prior range of $11.50-$13.50.
Tesla, Inc. TSLA reported second-quarter 2026 adjusted earnings of 33 cents per share, which declined 17.5% year over year. The figure missed the Zacks Consensus Estimate of 50 cents by 34%. Revenues advanced 25.5% to $28.24 billion and surpassed the consensus estimate of $25.81 billion by 9.41%. Tesla expects 2026 capital expenditures to exceed $25 billion and rise further over the next two to three years.
Genuine Parts Company GPC reported second-quarter 2026 adjusted earnings of $2.15 per share, beating the Zacks Consensus Estimate of $2.10 by 2.38%. The bottom line increased 2.4% from $2.10 in the year-ago quarter. Revenues rose 6% year over year to $6.54 billion and surpassed the consensus estimate of $6.39 billion by 2.36%. Genuine Parts reaffirmed its 2026 adjusted earnings guidance of $7.50-$8 per share and total sales growth outlook of 3-5.5%. Genuine Parts ended June with $2.3 billion of liquidity, including $559 million in cash.
Zacks' Research Chief Names "Stock Most Likely to Double"
Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.
This innovative software-as-a-service firm upped its user base +22% year over year. That rate is increasing and margins are expanding as AI efficiencies take effect. Of course, all our elite picks aren't winners, but this one could far surpass earlier Zacks' Stocks Set to Double like D-Wave Quantum, which shot up +680.1%.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
CarMax, Inc. (KMX): Free Stock Analysis Report
Genuine Parts Company (GPC): Free Stock Analysis Report
General Motors Company (GM): Free Stock Analysis Report
Tesla, Inc. (TSLA): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).