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- KMX - F2Q26 - Auto industry flashing red?
KMX - F2Q26 - Auto industry flashing red?
Cheat Sheets presented by stocktwits
CARMAX (KMX)
🚗💻 Nation's Largest Used Auto Retailer | Omni-Channel Experience
Q2 2026 Results | $6.6B Revenue, -6% YoY, Inventory Challenges Continue
💰 Market Cap: $8.56B | 🏪 Locations: 250+ | 📉 Revenue: -6% YoY ($6.6B)
👨💼 CEO Bill Nash | 📊 Used Unit Comps: -6.3% | 💳 CAF Penetration: 42.6%
$45.72
📉 -$11.33 (-19.86%) Today
Current Price
Price Target Scenarios
18-Month Horizon (2026 Targets)
$85.00
Bull Case (+86%)
Market Recovery
Digital Dominance
📊 Valuation Calculation:
• 2026E Revenue: $28B × P/S: 0.45x = $85.00
🚀 Key Assumptions:
Used auto market recovery • Same-store sales turn positive • Digital transformation success • "Wanna Drive?" campaign momentum • Inventory optimization • Market share expansion
$65.00
Base Case (+42%)
Gradual Stabilization
Industry Leader
📊 Valuation Calculation:
• 2026E Revenue: $26B × P/S: 0.37x = $65.00
⚖️ Key Assumptions:
Market conditions stabilize • Gradual same-store sales improvement • Cost management continues • Omni-channel advantage sustained • Auto finance growth
$35.00
Bear Case (-23%)
Market Disruption
Continued Decline
📊 Valuation Calculation:
• 2026E Revenue: $22B × P/S: 0.24x = $35.00
🔻 Key Assumptions:
Same-store sales continue declining • Digital competitors gain share • Economic recession impacts • Interest rate pressure • Inventory depreciation accelerates
Bottom Line for Retail Investors
🚗
Market Leader Position
Nation's largest used auto retailer, 250+ locations, omni-channel experience, 30+ years of brand trust
💻
Digital Transformation
"Wanna Drive?" campaign, seamless online/offline experience, customer-centric approach, inventory optimization
💰
Financial Resilience
CAF penetration 42.6% (+60bps), $900M securitization deal, $150M SG&A reduction plan, Sky 2.0 AI assistant rollout
⚠️
Market Headwinds
Same-store sales declining, inventory depreciation, competitive pressure, economic uncertainty impact
📊 Q2 2026 "Fell Short of Expectations" Results
$6.6B Revenue, -6% YoY, $1,000 Inventory Depreciation Over One Month
💵
$6.6B
Q2 2026 Revenue
-6% YoY
📊
$0.64
EPS (Diluted)
vs $0.85 Prior Year
🚗
-6.3%
Used Unit Comps
YoY Decline
💰
42.6%
CAF Penetration
+60bps YoY
📞 Key Q2 2026 Earnings Highlights
📉
Inventory Depreciation
$1,000 depreciation over one month period, tariff speculation impact, inventory positioning challenges
🏪
Unit Sales Decline
Total retail units -5.4%, used unit comps -6.3%, each month weaker throughout quarter
💰
CAF Provision Hit
$142M loan loss provision, 2022-23 vintages struggling, additional $71M portfolio adjustment
👥
Customer Traffic Issues
Web traffic up but conversion to selling opportunities down, high FICO customers sitting sidelines
📍 CEO Commentary: "While our second quarter results fell short of our expectations, we remain focused on driving sales, gaining market share" - Bill Nash
💡 Strategic Priorities: $150M+ SG&A reductions over 18 months, additional $125 COGS savings on track, "Wanna Drive" campaign launch
👥 Customer Insights: High FICO customers (600+) sitting on sidelines, under $25k vehicles gaining share, 40% of inventory reserved at any time
🔮 Market Outlook: September stronger than Q2 months, Q3 GPU expected below record Q3 2025 levels, continued market share pursuit
📊 Q2 2026 Performance & Key Metrics
| Metric | Q2 2026 | Performance |
|---|---|---|
| Revenue | $6.6B | -6% YoY |
| Total Gross Profit | $718M | -6% YoY |
| Retail GPU | $2,216 | Historical Average |
| CAF Income | $103M | -$13M vs Prior Year |
| CAF Reserve Balance | $507M | 3.02% of Receivables |
SG&A Expenses$601M
Share Repurchases$180M
🎯 Management Commentary & Strategic Priorities
"Our second quarter results fell short of our expectations, we remain focused on driving sales, gaining market share, and delivering significant year-over-year earnings growth." - CEO Bill Nash. Key priorities: competitive pricing, "Wanna Drive" campaign, $150M+ SG&A reductions over 18 months, CAF penetration growth. CAF full-year income expected flat to slightly down vs. prior year guidance of growth. September performance stronger than Q2 months. 2024-25 CAF vintages meeting expectations while 2022-23 vintages required additional $71M provision adjustment.
🚀 Why KMX Bulls Are Right
👑
Market Leadership
Nation's largest used auto retailer, 250+ locations, 30+ year track record, Fortune 100 Best Companies to Work For
💻
Digital Innovation
"Wanna Drive?" campaign launched, Sky 2.0 AI assistant, record high NPS scores, omnichannel experience leadership
💰
Financial Strength
Strong balance sheet, auto finance arm growth, disciplined cost management, inventory optimization capabilities
🔄
Recovery Catalyst
Used auto market cyclical recovery, inventory repositioning, SG&A reduction program, operational leverage potential
🐻 Why KMX Bears Have Valid Concerns
📉
Same-Store Decline
-7.1% YoY same-store sales, weakening each month sequentially, demand deterioration accelerating
💸
Credit & Margin Pressure
$142M CAF provision, 2022-23 vintages struggling, inventory depreciation, margin compression, earnings shortfall
🏪
Digital Competition
Carvana, online competitors gaining share, changing consumer preferences, physical footprint disadvantage
🌊
Market Headwinds
Economic uncertainty, consumer spending pressure, tariff impacts, interest rate environment challenges
This analysis is for informational purposes only and should not be considered investment advice. Please consult with a financial advisor before making investment decisions.
