CarMax: The Recovery Can Continue

Seeking Profits5.13K FollowersFollow5ShareSavePlay(11min)CommentsSummaryCarMax remains a "Buy" as shares rebounded 30%, with a current valuation at ~14x forward earnings and further upside potential.Q3 results showed weak sales and margins, but CarMax Finance delivered stable profits, supporting overall cash flow and buybacks.KMX plans to cut gross margins and sustain elevated marketing to boost volumes, while awaiting a permanent CEO for strategic clarity.A healthy balance sheet and ongoing buybacks underpin shareholder returns, with EPS expected to rise to $2.80-$3.05 next year. JHVEPhoto/iStock Editorial via Getty Images CarMax, Inc. (KMX) shares have been a very poor performer over the past year, losing about half of their value. The used car retailer has struggled with weak sales as lower-income consumers face affordability pressure, leading to the departure of its CEO. WhileThis article was written bySeeking Profits5.13K FollowersFollowOver fifteen years of experience making contrarian bets based on my macro view and stock-specific turnaround stories to garner outsized returns with a favorable risk/reward profile. If you want me to cover a specific stock or have a question for an article, just let me know!Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.