CarMax Jumps 6% as Quarterly Earnings Hit $1.16 per Share and Buybacks Set to Resume; Carvana Rises 3%, Lithia Motors Ticks Up

CarMax (NYSE:KMX | KMX Price Prediction) stock is up 6% to $59.75 early in the session after the used-car retailer posted stronger fiscal 2027 second-quarter earnings and indicated a return to share buybacks. The report offers a fresh read on whether CarMax’s sharper pricing is winning shoppers back, and rival auto retailers are edging higher in response.

Online rival Carvana (NYSE:CVNA) stock is up 3% to $62.10, tracking CarMax’s direction. Lithia Motors (NYSE:LAD) stock is up 0.8% to $305.40, a more muted response from a franchised dealer that also sells new cars. AutoNation (NYSE:AN) gives the group a further point of comparison.

Sector-wide buying looks tame by comparison, with the SPDR S&P Retail ETF (NYSEARCA:XRT) up just 0.4%. Over at the index level, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is up 0.2%. Because the retail fund is modified equal-weighted across its holdings, a sharp jump in CarMax stock alone barely nudges it, which fits how the ETF is built.

Earnings Jump Meets a Buyback Restart

CarMax posted net earnings per diluted share of $1.16 for the quarter, a big step up from a much smaller figure a year earlier. Beyond earnings, CarMax’s total net revenues rose sharply and its combined retail and wholesale used vehicle unit sales grew by double digits. At established locations, CarMax’s comparable store used unit sales also rose.

Management said pricing actions aimed at a better sales trend drove that volume, and gross profit per retail used unit fell as a result. The auto finance arm also grew its income, helped by a lower provision for loan losses and a gain on the sale of auto loans. CarMax stated it intends to resume share repurchases at a modest level in the current fiscal quarter, after buying back no stock in the quarter just reported.

Bull and Bear Cases for CarMax

For supporters, the quarter shows CarMax’s pricing actions working, with unit volumes and revenue climbing after a long stretch of soft demand, and CarMax’s rebounding volume gives the company early proof that sharper sticker prices can pull shoppers back into CarMax stores. Such pricing could also help CarMax compete more directly with online sellers such as Carvana.

Skeptics see a costlier trade, since CarMax won those units by giving up margin on each car. Those items sit outside store economics. Part of the earnings increase also came from a lower loan loss provision and a one-time gain on selling auto loans, and they make the profit recovery harder to judge.

The buyback restart may reveal the most about how management views its own leverage, since the company sat out repurchases entirely last quarter, and resuming at a modest pace suggests growing comfort with the balance sheet, though the scale remains unspecified.

Peer Moves Offer a Cleaner Test

Carvana and Lithia Motors sell into the same used-vehicle demand as CarMax, which makes their direction a useful test of the story. Sustained gains in Carvana and Lithia Motors shares would point to an industry recovery, while a decline in those stocks would mark the quarter as a CarMax-specific result.

Initial price action leans company-specific, as the smaller gains in Carvana and Lithia Motors shares lag the jump in CarMax stock. AutoNation offers a franchised-dealer read on the same demand. That gap is the clearest early signal of how the market is reading the quarter.

What to Watch Next

CarMax will host a virtual strategic update on November 3, where the company intends to detail its growth plan, key initiatives and targets. The company made separate moves. It named an executive to a newly created chief digital and customer officer role and promoted an internal leader to run a centralized strategy, data science and pricing function, with both reporting to CarMax’s chief executive.

Investors may want to watch for detail on buyback pace and retail margin plans at that event. Because part of the earnings lift came from finance items, shareholders should keep their positions moderate until store margins show steadier footing. Follow-through in Carvana and Lithia Motors shares could also show whether demand gains extend across the industry.

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