Group 1 - CarMax Inc is set to report its fourth-quarter results on April 10, with analysts expecting earnings of 64 cents per share, indicating a 100% increase from the same quarter last year [1] - The stock has experienced a year-to-date decline of 9.3%, but was up 0.5% at $74.09, aiming to end a three-day losing streak [1] - Historically, CarMax has shown a positive post-earnings trend, finishing higher after six of its last eight reports, with an average move of 7% over the past two years [2] Group 2 - The options market indicates a heightened interest in CarMax, with a 10-day call/put volume ratio of 3.16, ranking higher than 98% of readings from the past year [3] - The current options pricing suggests a larger expected swing of 14.5% following the earnings report, compared to the historical average [2] - There is a potential risk of a negative post-earnings move leading to an unwinding of the current optimism in the options market [3]

Core Viewpoint - The article discusses potential investment opportunities in companies that are likely to perform well amid the uncertainty created by recent U.S. tariffs, particularly focusing on companies with limited international exposure and those providing consumer staples. Group 1: T-Mobile - T-Mobile is a major U.S. wireless carrier that has been gaining market share and is insulated from tariff impacts due to its focused business model [4][5] - The company reported free cash flow of $17 billion in 2024, up from $13.6 billion in 2023, with management forecasting $17.3 billion to $18 billion for the current year [5] - T-Mobile's strategy includes returning capital to shareholders through share repurchases and a modest dividend growth plan, providing it with flexibility compared to competitors like AT&T and Verizon [7][8] Group 2: CarMax - CarMax, the largest used-vehicle dealer in the U.S., is expected to benefit from increased demand for used cars due to a 25% tariff on auto imports, which could raise new car prices by $3,500 to $16,000 [9][10] - The company maintains a gross profit of around $2,300 per vehicle, allowing it to grow earnings if demand shifts to used vehicles [11] - CarMax's stock is currently priced at less than 20 times forward earnings, presenting a potential bargain if tariffs drive higher unit sales [13] Group 3: General Mills - General Mills is positioned to benefit from price increases on grocery items due to tariffs, as it has strong brands that are less affected by inflationary pressures [14][15] - The company has maintained a gross margin of around 35%, significantly higher than competitors, and is focused on cost savings and new product investments [16][17] - Despite a projected 2% drop in earnings per share for fiscal 2026, General Mills is seen as a stable investment option, trading at less than 15 times expected earnings [17]

Core Points - CarMax has been named one of the 100 Best Companies to Work For in 2025, marking the 21st consecutive year on this list, ranking 69 [1] - The recognition is based on employee feedback, with over 1.3 million U.S. employees surveyed by Great Place to Work [2] - CarMax has received additional accolades, including "Best Workplaces in Retail" and "Most Innovative Companies" [3] Company Overview - CarMax is the largest retailer of used cars in the U.S., selling approximately 770,000 used vehicles and 550,000 wholesale vehicles in the fiscal year ending February 29, 2024 [4] - The company originated over $8 billion in receivables through CarMax Auto Finance during fiscal 2024, contributing to a portfolio exceeding $17 billion [4] - CarMax operates over 245 store locations and employs nearly 30,000 associates [4] Employee Benefits - CarMax offers competitive pay and benefits, including discounts on car purchases for family members, immediate 401(k) eligibility with a 6% match, wellness benefits, and comprehensive medical plans [5] - Additional benefits include tuition reimbursement, adoption assistance, and an employee stock purchase plan [5]

Core Insights - CarMax has been recognized as one of the 100 Best Companies to Work For in 2025, marking its 21st consecutive year on this prestigious list, ranking 69 overall [1][2] - The recognition is based on employee feedback, with over 1.3 million U.S. employees surveyed to assess workplace satisfaction [2] - CarMax has received additional accolades, including "Best Workplaces in Retail," "Most Innovative Companies," and recognition as a "Military Friendly Employer" [3] Company Overview - CarMax is the largest retailer of used cars in the U.S., having sold approximately 770,000 used vehicles and 550,000 wholesale vehicles during the fiscal year ending February 29, 2024 [4] - The company originated over $8 billion in receivables through CarMax Auto Finance in fiscal 2024, contributing to a total portfolio exceeding $17 billion [4] - CarMax operates over 245 store locations and employs nearly 30,000 associates [4] Employee Benefits - CarMax offers competitive pay and benefits, including immediate 401(k) eligibility with a 6% match, wellness benefits, paid time off, and tuition reimbursement [5] - Employees also receive discounts on car purchases, which can extend to family members, and access to wellness programs like gym discounts and Headspace for mindfulness [5]

Core Insights - The used car market is undergoing significant changes influenced by consumer preferences, technology, and economic factors, with CarMax and Carvana representing contrasting business models and trajectories [1] Group 1: Carvana's Performance - Carvana's stock has shown signs of recovery following a strong earnings report, with a revenue increase of 46% to $3.54 billion and a gross profit rise of 90% to $763 million [2][3] - The company reported a net income of $159 million and an adjusted EBITDA margin of 10.1%, indicating a shift towards profitability [3] - Analysts are optimistic about Carvana's future, projecting a stock price increase to a consensus range of $260 - $265, suggesting a healthy upside from its current price [3] Group 2: CarMax's Position - CarMax is preparing for its fourth-quarter earnings call amid significant market changes, with analysts maintaining a Hold rating and an average price target of $90.82, indicating a potential upside of 17.48% from its current price of $77.31 [6][7][8] - The company is implementing omnichannel initiatives to enhance customer experience, particularly targeting younger demographics who prefer remote shopping and flexible delivery options [9] Group 3: Business Models and Strategies - CarMax operates primarily through physical locations, which provides a reliable customer service experience but incurs higher overhead costs, while Carvana focuses on a fully online model emphasizing convenience [10] - Carvana's recovery is attributed to improved logistics, integration with ADESA, cost-cutting measures, and AI-powered customer service tools, enhancing operational efficiency [4][5] - CarMax is focusing on sustainable profitability and adapting its infrastructure to meet evolving consumer preferences, contrasting with Carvana's initial aggressive expansion strategy [12] Group 4: Market Dynamics - The potential for tariffs in the used car market could impact both companies, as rising new car prices may drive customers towards used vehicles, although market conditions can change rapidly [13] - Carvana presents a riskier but potentially more rewarding investment opportunity due to its growth potential, while CarMax offers stability and consistent profitability through its established business model [14] Group 5: Future Outlook - The success of both companies will depend on their ability to adapt to the changing used car market and effectively execute their respective strategies, with each serving different customer segments [15]

Partnership Overview - Angel City Football Club (ACFC) has announced a partnership with CarMax, the largest retailer of used cars in the U.S., designating CarMax as a Founding Partner and Official Used Auto Retailer [1] - The partnership aims to focus on community impact, particularly supporting youth sports programs in the Los Angeles area, enhancing fan engagement, and offering special promotions on game days [1][2] Community Impact Initiatives - CarMax will support the "Essentials" pillar of ACFC's commitment to Equity, Essentials, and Education, which includes providing monetary funds for youth sports access [2] - The partnership will feature the Angel City Camps Series, consisting of ten weeks of youth soccer camps serving approximately 500 kids across the greater LA region [2] Event Sponsorships - CarMax will be the Presenting Partner for ACFC's annual Season Ticket Member Event, one Title Night each season, and will provide select fans with free parking for each match [3] CarMax's Commitment to Women's Sports - CarMax has a history of championing integrity and transparency in the automotive industry and has increased its investment in women's sports partnerships since 2020 [4] - The company is also a multi-year partner with the National Women's Soccer League (NWSL) and has committed to increasing Shield bonuses over the last three years [5] Angel City Football Club Overview - ACFC, entering its fourth season in 2025, is based in Los Angeles and competes in the National Women's Soccer League [6] - The club is valued at $250 million, making it the world's most valuable women's sports team [6] CarMax Overview - In the fiscal year ending February 29, 2024, CarMax sold approximately 770,000 used vehicles and 550,000 wholesale vehicles, with over $8 billion in receivables originated through CarMax Auto Finance [8] - CarMax operates over 245 store locations and has been recognized for 20 consecutive years as one of the Fortune 100 Best Companies to Work For® [8]

Core Insights - CarMax is hosting in-person hiring events for automotive technicians and service professionals in 12 cities on February 20, 2025, from 10:00 a.m. to 7:00 p.m. local time [1] - The company is looking to fill various positions, including technicians, detailers, painters, and supply associates, to support its operations and a new reconditioning and auction center in El Mirage, AZ [1][2] - On-the-spot job offers and sign-on bonuses up to $7,500 are available for some positions, with compensation varying by location and experience [2] Hiring Events - The hiring events will take place in cities including El Mirage, AZ; Carrollton, GA; Norcross, GA; Kennesaw, GA; Duarte, CA; Laurel, MD; Sterling, VA; Garland, TX; Virginia Beach, VA; Smithtown, NY; Puyallup, WA; and Savannah, GA [4] - Interested candidates can RSVP and find more information at carmaxautotech.com, and online applications are also accepted at careers.carmax.com [3] Employee Benefits - CarMax offers competitive pay and benefits, including discounts on car purchases for employees and their family members, immediate 401(k) eligibility with a 6% match, wellness benefits, paid time off, comprehensive medical plans, tuition reimbursement, and an employee stock purchase plan [4] - The company emphasizes a supportive work culture and career growth opportunities for associates [3][4] Community Engagement - CarMax partners with TechForce Foundation to support students pursuing automotive careers through the CarMax Scholarship Fund, which assists with tuition and attendance expenses [6] - The company has been recognized for its commitment to technicians and has received multiple awards for being a top workplace, including being named one of FORTUNE magazine's 100 Best Companies to Work For® for 20 consecutive years [7] Company Overview - CarMax is the largest retailer of used cars in the U.S., selling approximately 770,000 used vehicles and 550,000 wholesale vehicles during the fiscal year ending February 29, 2024 [8] - The company originated over $8 billion in receivables through CarMax Auto Finance, contributing to a portfolio exceeding $17 billion [8] - CarMax operates over 245 store locations and employs nearly 30,000 associates [8]

Group 1 - Momentum investing focuses on "buying high and selling higher" rather than traditional "buying low and selling high" strategies [1] - Fast-moving trending stocks can lose momentum if their future growth does not justify their high valuations, leading to potential downside risks for investors [2] - A safer investment strategy involves identifying bargain stocks that exhibit recent price momentum, utilizing tools like the Zacks Momentum Style Score [3] Group 2 - CarMax (KMX) is highlighted as a strong candidate for momentum investing, with a recent price increase of 4.3% over the past four weeks [4] - KMX has shown a significant price gain of 15.5% over the past 12 weeks, indicating strong momentum, with a beta of 1.71, suggesting it moves 71% more than the market [5] - KMX has a Momentum Score of B, indicating a favorable time to invest, and it has a Zacks Rank 2 (Buy) due to positive earnings estimate revisions [6][7] Group 3 - KMX is trading at a Price-to-Sales ratio of 0.50, suggesting it is undervalued, as investors pay only 50 cents for each dollar of sales [7] - The stock has significant potential for further price appreciation, supported by its fast-paced momentum characteristics [8] - There are additional stocks that meet the criteria of the 'Fast-Paced Momentum at a Bargain' screen, providing further investment opportunities [8]

Financial Performance - CarMax reported net sales and operating revenues of $6,223.4 million for the third quarter of fiscal 2025, a 1.2% increase year-over-year, while total revenues for the first nine months were $20,350.3 million, reflecting a 2.7% decrease [124]. - Gross profit for the third quarter was $677.6 million, up 10.6% from the previous year, and for the first nine months, it reached $2,230.0 million, a 4.8% increase [124]. - Used vehicle sales for the three months ended November 30, 2024, reached $4,888.9 million, a 1.2% increase from $4,832.1 million in the same period of 2023 [138]. - Total net sales and operating revenues for the nine months ended November 30, 2024, decreased by 2.7% to $20,350.3 million from $20,909.4 million in 2023 [138]. - Interest and fee income for the three months ended November 30, 2024, was $469.2 million, a 10.6% increase from $426.9 million in 2023 [180]. - Total interest margin increased to 6.2% for both the third quarter and first nine months of fiscal 2025, up from 5.9% and 6.0% in the respective periods of fiscal 2024 [183]. Vehicle Sales and Inventory - Used vehicle unit sales totaled 184,243 in the third quarter, a 5.4% increase, while total used unit sales for the first nine months were 606,395, up 2.2% [124]. - The company purchased approximately 270,000 vehicles during the third quarter, a 7.9% increase from the prior year, with over half of consumer purchases made through the online appraisal experience [132]. - Used vehicle unit sales increased by 5.4% to 184,243 units in the three months ended November 30, 2024, compared to 174,766 units in 2023 [139]. - Total inventory as of November 30, 2024, was $3.67 billion, a decrease of $12.9 million compared to the start of the fiscal year [190]. CarMax Auto Finance (CAF) - CarMax Auto Finance (CAF) income was $159.9 million for the third quarter, a 7.6% increase, and $422.4 million for the first nine months, showing a slight increase of 0.3% [124]. - As of November 30, 2024, CAF serviced approximately 1.1 million customer accounts within a $17.76 billion portfolio of managed receivables, financing 42.8% of retail used vehicle unit sales in the first nine months of fiscal 2025 [120]. - CAF's managed portfolio aims for cumulative net losses in the 2% to 2.5% range over the life of the loans, with actual performance potentially varying based on economic conditions [172]. - The allowance for loan losses as a percentage of ending managed receivables decreased to 2.70% as of November 30, 2024, from 2.92% in 2023 [182]. Cost Management and Efficiency - The company is focusing on cost efficiencies, targeting savings of approximately $200 per retail unit, with half of these savings already realized [131]. - SG&A expenses increased by $15.8 million, or 2.8%, in Q3 FY2025, with SG&A as a percentage of gross profit improving by 6.4% [164][165]. - SG&A expenses increased by $119.4 million, or 7.0%, in the first nine months of FY2025, with a 2.9% increase when excluding a prior year legal settlement [166]. Expansion and Strategic Initiatives - CarMax aims to achieve annual sales of over 2 million combined retail and wholesale units between fiscal 2026 and fiscal 2030, extending the timeframe due to market uncertainties [135]. - CarMax plans to open two additional stores and one stand-alone auction facility by the end of the fiscal year, continuing its expansion strategy [135]. - The company opened 1 new used car store in the three months ended November 30, 2024, bringing the total to 248 stores [144]. Debt and Financial Position - As of November 30, 2024, total debt amounted to $18.70 billion, a slight decrease from $18.78 billion as of February 29, 2024 [198]. - Cash and cash equivalents were reported at $271.91 million, down from $574.14 million in the previous period [198]. - Non-recourse notes payable related to asset-backed term funding transactions totaled $13.16 billion, with an additional $3.94 billion from warehouse facilities as of November 30, 2024 [201]. - The company has $2.16 billion of unused capacity in its warehouse facilities as of November 30, 2024 [201]. Market Outlook and Risks - The company anticipates that fourth quarter fiscal 2025 results will exceed those of the third quarter, supported by improved comparable store used unit sales [145]. - The company cautions that forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from expectations [206].

Group 1 - The stock of CarMax (KMX) has shown a significant price momentum, gaining 12.6% over the past 12 weeks, indicating strong investor interest [5][10] - KMX has a favorable Momentum Score of A, suggesting it is an opportune time for investors to enter the stock to capitalize on its momentum [11] - The stock is currently trading at a reasonable valuation with a Price-to-Sales ratio of 0.51, meaning investors pay only 51 cents for each dollar of sales [12] Group 2 - KMX has a beta of 1.71, indicating that it moves 71% higher than the market in either direction, reflecting its fast-paced momentum [9] - The upward trend in earnings estimate revisions has contributed to KMX earning a Zacks Rank 2 (Buy), which is associated with strong momentum effects [6] - The 'Fast-Paced Momentum at a Bargain' screen identifies KMX as a stock that is both fast-moving and attractively priced, making it a strong candidate for investment [8][13]