Thesis : KMX’s poor quarterly results took a big bite out of the company’s valuation. Following the steep decline, I suspect share prices are bottoming out and may recover a bit. It is, in my opinion, too late to sell, althoughMarkets rise and fall, booms come and go, and the world keeps ticking. Ultimately, I believe observing megatrends, as difficult as they can be to spot, let alone fully comprehend, can yield insights into the advance of human society, which in turn could pave the way for many useful in ...

Core Insights - CarMax reported earnings per share (EPS) of $0.64, which was below the estimated $1.03, and revenue of approximately $6.59 billion, falling short of the expected $7.02 billion, indicating challenges in the current market environment [2][6] - The company experienced a decline in used-car sales, with retail used unit sales decreasing by 5.4% and comparable store used unit sales falling by 6.3%, which significantly impacted its stock value and financial performance [3][6] - Despite the decrease in sales volume, CarMax maintained solid unit margins, with a gross profit per retail used unit of $2,216 and $993 per wholesale unit, indicating profitability on a per-unit basis [4][6] Financial Metrics - CarMax has a price-to-earnings (P/E) ratio of approximately 15.54 and a price-to-sales ratio of about 0.32, reflecting its market valuation [5] - The enterprise value to sales ratio is around 0.98, and the enterprise value to operating cash flow ratio is approximately 25.17, indicating the company's financial health [5] - The debt-to-equity ratio is about 2.85, suggesting significant financial leverage, but the company maintains a strong liquidity position with a current ratio of approximately 2.39, allowing it to cover short-term liabilities [5]

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Group 1 - The core focus of Quad 7 Capital is on short- and medium-term investments, income generation, special situations, and momentum trades [1] - The company has a proven track record, highlighted by their February 2020 call to sell everything and go short, and their average positioning of 95% long and 5% short since May 2020 [1] - Quad 7 Capital emphasizes teaching investors to become proficient traders through their playbook, providing in-depth, high-quality research with clear entry and exit targets [1] Group 2 - Benefits of BAD BEAT Investing include learning to understand market dynamics, executing well-researched trade ideas weekly, and access to multiple chat rooms [2] - Subscribers receive daily summaries of key analyst upgrades and downgrades, along with education on basic options trading and extensive trading tools [2]

Core Insights - BAD BEAT Investing, led by Quad 7 Capital, has been providing investment opportunities for nearly 12 years, with a notable call in February 2020 to sell everything and go short, maintaining an average position of 95% long and 5% short since May 2020 [1] - The team consists of 7 analysts with diverse expertise in business, policy, economics, mathematics, game theory, and sciences, focusing on both long and short trades [1] - The investment strategy emphasizes short- and medium-term investments, income generation, special situations, and momentum trades, aiming to educate investors on becoming proficient traders [1] Company Offerings - BAD BEAT Investing provides well-researched trade ideas weekly, along with access to 4 chat rooms and daily summaries of key analyst upgrades and downgrades [2] - The program includes education on basic options trading and offers extensive trading tools to enhance investor knowledge and execution [2]

Core Insights - CarMax Inc (NYSE:KMX) shares have dropped 22.2%, trading at $44.37 after missing fiscal second-quarter expectations, reporting earnings of $0.64 on revenue of $6.59 billion, with declines in wholesale and used vehicle segments [1] - The stock is on track to extend its losing streak to five sessions, marking one of its steepest losses since 2022, trading at five-year lows and below the $50 level for the first time in that period, having already lost 45.8% in 2025 [2] Market Sentiment - At the International Securities (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), KMX's 50-day call/put ratio of 2.63 is in the 80th percentile of the last year, indicating a potential unwinding of optimism in the options market that could create additional headwinds for the equity [3] - CarMax stock is experiencing increased bearish attention, with 21,000 puts placed today, which is 24 times the usual intraday amount, with the October 40 put being the most popular contract [4]

Core Viewpoint - CarMax (KMX.US) experienced a significant decline of over 22%, reaching a five-year low of $44.37, following disappointing financial results for Q2 of fiscal year 2026 [1] Financial Performance - The diluted earnings per share for Q2 were reported at $0.64, down from $0.85 a year ago, and below the analyst expectation of $1.01 according to FactSet [1] - Total net sales and revenue amounted to $6.59 billion, a decrease from $7.01 billion year-over-year, also falling short of the $7.01 billion forecast by analysts [1] Analyst Sentiment - Wedbush's report indicated that CarMax's poor Q2 performance heightened investor concerns regarding the company's ability to maintain its market leadership and drive further growth [1] - The stock rating for CarMax was downgraded from "Outperform" to "Neutral," with the target price reduced from $84 to $54 [1]

Core Viewpoint - CarMax (KMX.US) experienced a significant decline of over 22%, reaching a five-year low of $44.37, following disappointing financial results for Q2 of fiscal year 2026 [1] Financial Performance - The diluted earnings per share for Q2 were reported at $0.64, down from $0.85 a year ago, and below the analyst expectation of $1.01 according to FactSet [1] - Total net sales and revenue amounted to $6.59 billion, a decrease from $7.01 billion year-over-year, also falling short of the $7.01 billion forecast by analysts [1] Analyst Sentiment - Wedbush's report indicated that CarMax's poor Q2 performance heightened investor concerns regarding the company's ability to maintain market leadership and drive further growth [1] - The stock rating for CarMax was downgraded from "Outperform" to "Neutral," with the target price reduced from $84 to $54 [1]

Shares in CarMax dropped as much as 24% in morning trading. Analysts had projected higher profits and stable sales, but the company missed on both fronts. ...

Economic Indicators - US jobless claims decreased to 218,000 for the week ending Sept. 20, down from 232,000 previously, with continuing claims slightly falling to 1.92 million [2][15] - Q2 GDP growth rebounded at an annual rate of 3.8%, recovering from a 0.6% drop in Q1, surpassing the estimated 3.3% [15] Company Updates - Costco's quarterly earnings report is anticipated, with expectations of higher sales as consumers seek deals amid economic uncertainty [3][15] - Starbucks plans to cut 900 corporate jobs and close unprofitable stores as part of a turnaround strategy, with notifications to employees on Sept. 26 [5][15] - Starbucks CEO Brian Niccol stated that savings from job cuts will be reinvested into stores, including enhancements in customer service and new coffeehouse designs [6][15] - CarMax reported Q2 earnings of $0.64 EPS, missing the expected $1.03, and revenue of $6.59 billion, below the $7.05 billion estimate, leading to a 12% drop in shares premarket [7][15] Government and Market Impact - The White House has instructed federal agencies to prepare for permanent job cuts if a government shutdown occurs, targeting programs without legally required funding [9][15] - President Trump is planning to sign an agreement to separate TikTok's US operations from ByteDance, pending China's approval, which could involve a deal worth tens of billions [10][15] - Intel shares rose over 3% in premarket trading following reports of talks with Apple for an investment [11][15] Market Sentiment - Analysts suggest the stock market may be experiencing a new normal with high prices reflecting investor excitement but also risk, reminiscent of the dot-com era [12][15] - Despite concerns about overvalued stock prices, many investors remain optimistic, creating a tension between risk warnings and ongoing market enthusiasm [12][15]