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CarMax Reports Record Q1 Earnings Growth
CarMax (NYSE:KMX) reported Q1 FY2026 earnings on June 20, 2025, with total sales rising 6% year over year to $7.5 billion, used unit comps up 8.1%, and record diluted EPS of $1.38, up 42% year over year. Management accelerated the share repurchase pace, advanced omnichannel and artificial intelligence (AI)-driven efficiency gains, and earmarked a $632 million principal balance of non-prime auto loans for a risk-mitigating securitization. The following analysis focuses on fundamental shifts in funding strategy, operational advancements, and margin expansion relevant for long-term shareholders.CarMax Auto Finance (CAF) originated over $2.3 billion in loans at a 41.8% penetration rate, and earmarked a $632 million principal balance of non-prime receivables for off-balance sheet sale -- the first such move for the company. CAF's total loan loss provisions climbed to $102 million, reflecting increased reserves on legacy 2022-2023 cohorts and preparation for full-spectrum lending, resulting in a reserve balance of $474 million, or 2.76% of managed receivables excluding loans held for sale.Continue reading
CarMax (NYSE:KMX) reported Q1 FY2026 earnings on June 20, 2025, with total sales rising 6% year over year to $7.5 billion, used unit comps up 8.1%, and record diluted EPS of $1.38, up 42% year over year. Management accelerated the share repurchase pace, advanced omnichannel and artificial intelligence (AI)-driven efficiency gains, and earmarked a $632 million principal balance of non-prime auto loans for a risk-mitigating securitization.
The following analysis focuses on fundamental shifts in funding strategy, operational advancements, and margin expansion relevant for long-term shareholders.
CarMax Auto Finance (CAF) originated over $2.3 billion in loans at a 41.8% penetration rate, and earmarked a $632 million principal balance of non-prime receivables for off-balance sheet sale -- the first such move for the company. CAF's total loan loss provisions climbed to $102 million, reflecting increased reserves on legacy 2022-2023 cohorts and preparation for full-spectrum lending, resulting in a reserve balance of $474 million, or 2.76% of managed receivables excluding loans held for sale.
