It’s been a bumpy ride as of late for CarMax (NYSE: KMX). A turnaround could be in store, though. As of March 16, the auto retailer has a new CEO in Keith Barr. The leadership transition marks the end of uncertainty in the company’s C-suite. The stock, which is down over 40% in the past 12 months, is trading at a discount and could be a solid buying opportunity now.
There are execution risks and rough roads to navigate in the used-car market, but CarMax is charting a new path for itself, and the turnaround has begun. Should investors consider buying CarMax while it’s under $45? Let’s take a look at how the largest retailer of used cars in U.S. is faring.
Will AI create the world’s first trillionaire? Our team just released a report on the one little-known company, called an “Indispensable Monopoly” providing the critical technology Nvidia and Intel both need. Continue »
CarMax is a company in transition. In addition to the new CEO, CarMax is facing pressure from activist investor Starboard Value. Starboard has taken a significant stake in CarMax, valued at roughly $350 million, and recently nominated two new members to the board of directors. Starboard was also behind the push to hire Barr as the permanent CEO.
The efforts to improve performance from both the newly appointed CEO and an activist investor should benefit investors in the long term. The car retailer is set to release its fourth-quarter 2025 results on April 14. Last quarter was rough for CarMax, as used-unit sales fell 8% and comparable-store sales were down 9%. Net earnings decreased year over year by more than 50%.
Much of the performance trouble last quarter can be attributed to macroeconomic headwinds, though, and CarMax is focused on improving its balance sheet through stock buybacks. The stock is relatively inexpensive right now, with both its forward and trailing P/E ratios hovering slightly above 13.
CarMax hit a 52-week high of $82 in March 2025. Looking back a bit further, the stock was trading above $100 per share just four years ago. With new leadership focused on performance improvement, user experience upgrades, and balance sheet strength, CarMax looks undervalued right now.
Starboard Value is also pushing for operational discipline. Overall, I like what CarMax is doing to steer the company in a positive direction. There are plenty of risks ahead for CarMax, though. Tariffs, along with shrinking consumer wallets, continue to pose real challenges. Investors should view the company through a long-term time horizon. A successful turnaround will require patience.
