The stock price of CarMax, the largest retailer of used cars in the U.S., is free-falling after releasing its latest earnings report, which lacks a timeframe for long-term goals.
CarMax (No. 141 on the Fortune 500) reported on Thursday results for its fourth quarter that ended February 28. Results slightly missed expectations on the top and bottom lines. The company also removed the timelines associated with achieving its long-term targets “given the potential impact of broader macro factors.” Shares have fallen more than 18% as of mid-day Thursday.
Bill Nash, president and CEO of CarMax, was asked on Thursday morning’s earnings call for further explanation of why the timeline was removed and whether the company had a pessimistic outlook on the economy. “It definitely wasn’t pessimistic,” Nash said.
But, he added: “Why put a target out there that’s really speculative, not knowing exactly where this environment is going to go?” Despite publicly not offering guidance the company still intends to reach its long-term goals, he said.
CarMax’s initial fiscal year guidance for 2026 to 2030 was the timeframe affected. Previously they had the stated goal to sell 2 million-plus combined retail and wholesale units annually, achieve an annual revenue target of $33 billion, and achieve a 5% nationwide market share of up to 10-year old vehicles, according to Seth Basham, managing director of equity research at Wedbush Securities.
CarMax also noted its business model is designed for double-digit EPS growth and high-teens EPS growth when used unit comps are in the mid-single digits, Basham wrote in a Thursday note to investors. “The primary source of the Q4 miss was used unit comps, which came in at 5.1% vs. consensus’ 6%, our 8% and a wide range of buy-side expectations of 5-9%,” he said. Wedbush gave CarMax an outperform rating with a 12-month price target of $100.
In Q4, CarMax earned net revenues of $6 billion, up 6.7%, year over year. Retail used unit sales were up 6.2%, comparable store used unit sales increased 5.1%, and wholesale units increased 3.1%.
The company reports its latest financial results in the shadow of a 25% tariff on auto imports to the U.S. that went into effect last week. Those were excluded from President Trump’s new 90-day pause on most of the reciprocal tariffs on imports. U.S. car sales got a boost in March in anticipation of the added costs due to tariffs.
New car prices are definitely going to go up due to tariffs, Nash said during the earnings call. “I think over time what could happen is that the used car prices will also go up,” he said. “Now the question is how much will they go up over what period of time.” CarMax is currently seeing a lot of interest in late-model used cars, Nash said.
“I think the other thing to think about on the tariffs that impact our business as well as anybody that sells used cars is just the parts piece,” he added. When it comes to reconditioning, the price of parts will be going up. That makes the company work towards efficiencies regarding the cost of goods sold to offset those increases, he said.
