CarMax: Patience Can Be Rewarded After Cautious 2027 Guidance

CarMax, Inc. remains a Buy in the low $40s, with a fair value of ~$50, offering 15%+ upside despite near-term headwinds. KMX faces margin compression from weak used car pricing, higher loan loss provisions, and a strategic shift toward Tier 2 borrowers in its financing arm. Cost-cutting initiatives, paused buybacks, and conservative guidance position KMX for improved cash flow and potential EPS recovery in fiscal 2028.