CarMax FY 2026 earnings snapshot

CarMax (KMX) has just closed out FY 2026 with fourth quarter revenue of US$6.4b, a basic EPS loss of US$0.85 and net income of US$120.7m in the red, alongside a 2% same store sales decline. This puts a clear spotlight on margins. Over the year, quarterly revenue has moved from US$8.0b in Q1 2026 to US$6.4b in Q4 2026, while basic EPS has ranged from US$1.38 in Q1 to a loss of US$0.85 in Q4. Trailing twelve month EPS stands at US$1.68 and net income at US$247.3m. With trailing net profit margin at 0.9% and recent results shaped by a large one off loss, investors are likely to focus on how durable the underlying earnings power looks as margins come under pressure.

See our full analysis for CarMax.

With the latest figures on the table, the next step is to set these margins, revenue trends and EPS swings against the most common narratives around CarMax to see which stories still hold up and which may need a rethink.

Margins under pressure with 0.9% net margin

• Over the last twelve months CarMax generated US$27.7b in revenue and US$247.3m in net income, which works out to a 0.9% net margin compared with 1.8% a year earlier.
• Consensus narrative expects profit margins to move higher over time, yet current figures highlight the gap between that view and reality:
  • Analysts see margins rising from about 1.9% today to 3.1% in three years, while trailing twelve month net margin is sitting at 0.9% after a US$141.3m one off loss.
  • This weaker margin base means any improvement back toward those margin targets will need to offset both the recent loss and a same store sales decline of 2.5% over the last twelve months.

EPS swings and bullish growth story

• Across FY 2026, basic EPS moved from US$1.38 in Q1 to a loss of US$0.85 in Q4, with trailing twelve month EPS at US$1.68 compared with US$3.22 a year earlier. This shows a much lower earnings run rate despite full year profitability.
• Bulls argue that earnings growth can accelerate from this softer base, and the current numbers partly support and partly challenge that idea:
  • Forecasts call for earnings to grow about 27.5% per year over the next three years, while trailing earnings have been falling at around 23.5% per year over the past five years. These expectations assume a clear break from the recent trend.
  • The bullish narrative also leans on digital retail, cost efficiencies and CarMax Auto Finance to lift EPS. However, the latest year still includes that US$141.3m one off loss, which complicates reading how much of the EPS weakness is structural versus one time in nature.

Bulls are pointing to digital tools, sourcing improvements and finance income to justify faster profit growth from here, so it is worth seeing how that full story lines up against these FY 2026 numbers 🐂 CarMax Bull Case

Debt coverage and bearish cash flow concerns

• Debt is flagged as a major risk because operating cash flow does not comfortably cover it, alongside a net profit margin that has moved from 1.8% to 0.9% and a trailing twelve month net income of US$247.3m that is influenced by a US$141.3m one off loss.
• Bears focus on these cash flow and leverage pressures, and the reported figures give that view some clear support:
  • Weak coverage of debt by operating cash flow is highlighted as a key risk, so even though earnings are positive on a trailing basis, the ability of cash flows to service obligations is a central concern for more cautious investors.
  • At the same time, analysts are expecting revenue to edge down about 1% per year over the next three years, which leaves less room for error if higher loan loss provisioning or higher parts costs weigh on profitability further.

For anyone worried about balance sheet strain and cash coverage, these risk flags set the backdrop for the more cautious view on CarMax 🐻 CarMax Bear Case

Next Steps

To see how these results tie into long-term growth, risks, and valuation, check out the full range of community narratives for CarMax on Simply Wall St. Add the company to your watchlist or portfolio so you'll be alerted when the story evolves.

With bulls and bears both finding support in these numbers, it helps to weigh the evidence yourself and move quickly from headline to detail. To see how the current data lines up with both concerns and potential upside, start with these 2 key rewards and 3 important warning signs.

See What Else Is Out There

CarMax is working with thinner 0.9% net margins, weaker EPS, a one off loss and cash flows that do not comfortably cover debt.

If tight margins and balance sheet strain put you on edge, compare this position with companies in the solid balance sheet and fundamentals stocks screener (41 results) to quickly spot sturdier alternatives.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.