CarMax, Inc. (KMX) is set to report its third-quarter earnings before markets open on Thursday, December 18, and the outlook isn't particularly rosy for the Richmond, Virginia-based used car giant.
Wall Street analysts are forecasting quarterly earnings of 32 cents per share, a notable slide from the 81 cents per share CarMax posted in the same period a year ago. Revenue projections tell a similar story, with the consensus estimate sitting at $5.63 billion compared to $6.22 billion in the prior-year quarter, according to market data.
The anticipated decline follows an already disappointing second quarter back in September, when the company reported results that fell short of analyst expectations. Since then, CarMax shares have struggled, closing Tuesday at $40.63, down 0.7% for the session.
What the Most Accurate Analysts Are Saying
Recent analyst moves paint a cautious picture. Here's how some of the most accurate analysts covering CarMax have adjusted their positions:
Wedbush analyst Scott Devitt, who maintains an 80% accuracy rate, kept his Neutral rating on the stock with a $40 price target on November 18. Not exactly a ringing endorsement, but at least he's not running for the exits.
Truist Securities analyst Scot Ciccarelli (71% accuracy rate) maintained a Hold rating but trimmed his price target from $47 to $35 on November 7, signaling reduced expectations for the stock's near-term performance.
Things got more pessimistic from there. JP Morgan analyst Rajat Gupta (75% accuracy) downgraded CarMax from Neutral to Underweight on November 6, slashing his price target from $50 to $30. That's the kind of move that suggests real concern about the company's trajectory.
William Blair analyst Sharon Zackfia (65% accuracy) also cut her rating on November 6, moving from Outperform to Market Perform. And back in early October, Stephens & Co. analyst Jeff Lick (75% accuracy) downgraded the stock from Overweight to Equal-Weight while reducing his price target from $53 to $42.
The pattern is clear: analysts who've been right more often than not are getting more cautious about CarMax heading into these earnings. Whether Thursday's results prove them right or surprise to the upside will determine if the stock can shake off its recent doldrums.
