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CarMax's Q1 Sales Go Into Overdrive
Here's our initial take on CarMax's (NYSE: KMX) fiscal 2026 first-quarter financial report.
Key Metrics
| Metric | Q1 FY 2025 | Q1 FY 2026 | Change | vs. Expectations |
|---|---|---|---|---|
| Total revenue | $7.11 billion | $7.55 billion | +6% | Beat |
| Adjusted earnings per share | $0.97 | $1.38 | +42% | Beat |
| Retail used vehicle unit sales | 211,132 | 230,210 | +9% | n/a |
| Average used vehicle price | $26,526 | $26,120 | -1.5% | n/a |
CarMax Stays Strong Across the Business
There were a lot of good things to see in CarMax's financial report for the first quarter of its 2026 fiscal year. Total vehicle unit sales were up nearly 6% year over year, lifted by extremely strong performance on the retail side. Comparable store used unit sales were up 8.1% from the year-ago period, and total revenue from retail used vehicles climbed 7.5%. The company bought 336,000 vehicles from consumers and dealers during the quarter, up 7%, and revenue from the sale of extended protection plans on used vehicles got an 11% boost.
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The biggest news came on the bottom line. Earnings of $1.38 per share were up 42%, as CarMax largely kept cost increases in check. Expense management efforts played a key role, along with stronger gross profit figures on its retail sales.
CarMax CEO Bill Nash put the results into perspective, noting that the latest quarter was the fourth consecutive period of positive retail comps and double-digit percentage gains in earnings per share. Nash attributed much of the gains to CarMax's workers and investment in technology, citing digital capabilities as supporting 80% of retail sales. Only 14% of sales occurred completely online, but the remainder used online channels to reserve, finance, trade in, or create a sales order for a vehicle.
Immediate Market Reaction
Investors reacted positively to the good news, sending CarMax shares up nearly 11% in the first hour of premarket trading after releasing its financial report on Friday morning. In particular, most of those following the used-car specialist had anticipated much less extensive growth in earnings.
The bounce higher came as CarMax stock had been trading near its worst levels in two years. Fears about consumer sentiment had caused some to question whether buyers would step in to purchase CarMax vehicles. The results showed that despite macroeconomic pressures, consumers were prone to be opportunistic about making purchases even on terms that were attractive for CarMax.
What to Watch
A couple of other notable things stood out in the report. First, CarMax opened two new stand-alone centers for auctions and vehicle reconditioning, one near Phoenix and the other near Dallas. These two facilities should help support relatively strong markets in those areas.
Also, CarMax accelerated its stock repurchase activity, spending $200 million to buy back about 3 million shares. That leaves the company with $1.74 billion of unspent but authorized capacity to do future repurchases. Shareholders should see that as a reflection of CarMax's belief that attractive industry conditions could last quite a while into the future.
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Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CarMax. The Motley Fool has a disclosure policy.
