Earning Preview ｜CarMax Q3 revenue is expected to decrease by 05.48%, and institutional views are cautious
Earnings Agent12-11
Abstract
CarMax will report fiscal Q3 2026 results on December 18, 2025 Pre-Market. The preview assesses consensus forecasts and company indicators for revenue, margin, net profit, and adjusted EPS, and compiles recent institutional commentary to frame likely outcomes and stock drivers.
Market Forecast
Consensus and model-based projections for CarMax’s current quarter point to revenue of USD 5,710.84 million, with year-over-year change of -05.48%, forecast EBIT of USD 115.47 million with year-over-year change of -27.80%, and forecast adjusted EPS of USD 0.39 with year-over-year change of -36.10%; gross margin, net margin, and GAAP net profit outlooks are not explicitly guided, so no numerical forecast is quoted. The company’s core retail used-car business remains the primary revenue contributor, with wholesale vehicles and other segments providing incremental volume support; the forward mix suggests continued sensitivity to affordability, interest rates, and used-vehicle price normalization. The segment with the most promising improvement potential is the “other” category tied to ancillary products and services, which maintains smaller absolute revenue but can deliver incremental margins as volumes stabilize; specific revenue and YoY figures for this forecast are not available.
Last Quarter Review
CarMax’s previous quarter delivered revenue of USD 6,594.68 million, gross profit margin of 11.58%, GAAP net profit attributable to the parent company of USD 95.38 million, net profit margin of 01.35%, and adjusted EPS of USD 0.99, with revenue down 05.97% year over year and adjusted EPS up 16.47% year over year. Quarter-on-quarter net profit growth declined by -54.66%, reflecting margin pressure from softer unit demand and pricing normalization amid higher financing costs. Main business highlights: retail used-car revenue was USD 5,270.71 million, wholesale vehicles revenue was USD 1,149.57 million, and other revenue was USD 174.40 million; year-over-year changes by segment were not disclosed in the data set.
Current Quarter Outlook
Retail Used Vehicles
Retail used vehicles remain the core profit and revenue engine for CarMax, and this quarter’s setup is defined by affordability constraints, continued interest-rate pass-through to monthly payments, and a more rationalized pricing environment for used inventory. The company’s forecasted decline in revenue and EPS implies cautious unit throughput and measured margin capture, consistent with a market where consumers weigh financing costs and trade-in values carefully. A focus on inventory turns, disciplined acquisition costs, and reduced reconditioning cycle times can support gross margin stability even if headline revenue softens. If promotional activity is restrained and vehicle sourcing remains efficient, gross profit per unit can stay relatively resilient, helping buffer the impact of lower volumes on EBIT. The risk is that any renewed volatility in wholesale auction pricing or a sharper pullback in consumer credit availability would pressure conversion rates, resulting in additional deleverage in SG&A.
Wholesale Vehicles
Wholesale vehicles provide volume flexibility, enabling CarMax to manage aged inventory and optimize retail mix through the wholesale channel. The last quarter’s wholesale revenue of USD 1,149.57 million underscores the importance of this lever when retail absorption slows. For the current quarter, expectations center on measured auction throughput and tight appraisal management to preserve margin per wholesale unit, even as overall EBIT is forecast to decline by -27.80% year over year. Lower acquisition prices and more stable auction dynamics can limit volatility in gross profit; however, if wholesale pricing recedes more quickly than retail pricing, spreads may compress, and the channel’s contribution to consolidated margins could be constrained. Balancing retail and wholesale disposition will be crucial to protect consolidated gross margin, particularly with headline revenue expected to decrease and EPS indicating pressure from operating deleverage.
Other and Ancillary Products
The other segment, at USD 174.40 million last quarter, reflects finance and ancillary products, extended protection plans, and related services that can deliver attractive incremental margins. As unit volumes moderate, attachment rates and product penetration become more influential for consolidated profitability, making sales process consistency and digital enablement important contributors. In the current quarter, steady penetration of service contracts, selective lender partnerships, and disciplined underwriting can offset some volume challenges, stabilizing gross margin mix. While this revenue base is smaller than the vehicle segments, a focus on margin-rich add-ons can provide cushioning for EBIT and EPS, especially in quarters where unit sales soften. The primary risk is that consumer credit tightening or regulatory shifts could temper finance-related product uptake, limiting the segment’s ability to offset pressure elsewhere.
Stock Price Drivers This Quarter
Investors will likely center on revenue trajectory, gross profit per unit trends, and operating expense discipline relative to volume movement. With revenue projected at USD 5,710.84 million and EPS at USD 0.39, the implied deleverage makes SG&A containment and efficiency gains pivotal to sentiment, particularly if gross margin around recent levels of 11.58% proves sustainable. Unit sales cadence through late November and early December, any visible improvement in inventory days on hand, and signals on financing availability will heavily influence post-report reactions. Commentary on credit performance, lender appetite, and internal underwriting standards can alter expectations for EPS recovery in subsequent quarters.
Analyst Opinions
Recent institutional commentary skews cautious, with a majority of views aligning to neutral-to-bearish stances for the upcoming quarter based on forecast declines in revenue, EBIT, and EPS. Firms emphasize demand elasticity under higher borrowing costs and the pace of used-car price normalization as key constraints on near-term earnings power. Analysts highlight that consensus estimates for revenue at USD 5,710.84 million and EPS at USD 0.39 embed conservative assumptions for unit growth and margin per unit, suggesting limited room for upside unless sales conversion improves. Commentary points to SG&A control and inventory agility as necessary drivers to stabilize EBIT, with expectations that operational execution will be the main determinant of whether results meet or slightly miss forecasts. If management signals sustained improvements in sourcing efficiency and stable lender participation, some analysts see scope for gradual EPS recovery, but current-quarter sentiment remains restrained.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
