CarMax Q1 Preview: EPS, Revenue and What to Watch

CarMax reports fiscal first-quarter results before the open Thursday. The consensus calls for earnings of $0.98 a share on revenue of $7.43 billion, according to estimates compiled by Bloomberg. That would mark a decline from the year-ago quarter, when the used-car retailer posted $1.01 on $7.11 billion.

Estimate revisions have been mixed over the past three months. Of the 14 analysts covering the stock, seven cut their per-share numbers while four raised. The net revision trend points lower, a pattern that often precedes a print near the low end of the range. CarMax has beaten consensus in four of the last eight quarters, with an average surprise of roughly 3%.

Two big forces hang over the quarter. Used-car prices have softened as wholesale supply normalizes and financing costs stay elevated. The Manheim Used Vehicle Index, a benchmark for wholesale prices, fell 4% year-over-year in May, extending a slide that began in late 2023. Lower wholesale prices squeeze CarMax's inventory margins because the company carries vehicles on its balance sheet at acquisition cost and marks them down when market prices drop. That dynamic has pressured earnings across the sector, and Q1 likely was no exception.

The second factor is affordability. The average rate on a 60-month used-car loan topped 9% in the quarter, according to Edmunds data. Higher payments push some buyers out of the market or toward cheaper vehicles, which compresses CarMax's average selling price and unit volumes. The company reported a 5.6% drop in retail used-unit sales in the fourth quarter, and analysts expect a similar or slightly larger decline in Q1.