CarMax’s Revival May Hit Roadblock as US Consumer Sentiment Falters

CarMax Inc. stock has revved higher since May as the struggling car seller attempts to revive it’s business, however, mounting economic woes and stuttering consumer sentiment could threaten its recovery.

Shares of the Virginia-based firm have climbed 48% in 2026 so far, beating a 13% advance in the benchmark S&P 500 index. CarMax’s run up exemplifies investor optimism around new chief executive officer, Keith Barr, and his ability to execute a turnaround.

CarMax tapped Barr to lead the firm in February after firing his predecessor amid sagging sales and stock weakness in November. Investors and analysts are eager for more insight into his four-pillar strategic framework on Tuesday’s call and will also be mindful of any commentary on US consumer trends.

Since Barr has taken charge, the macro environment for autos has grown more complex. The US Federal Reserve hiked interest rates, which can lead to more expensive car payments. Elevated fuel costs increase the price at the pump, and the US consumer is growing more wary.

As the macro environment withers, this earnings report could offer an important signal as to whether CarMax is really in the midst of a Cinderella story or if it’s bound to turn back into a pumpkin.

The Street expects CarMax’s second-quarter profits to rise nearly 12% on 6.7% revenue growth year-over-year, according to data compiled by Bloomberg. However, recent results, even those under Barr’s tenure, have underwhelmed investors. For the past four quarters, several of which notched a profit beat, CarMax stock has declined after reporting.

“Beyond the quarter, the bigger debate is whether recent improvement is structural or cyclical,” Morgan Stanley analyst Daniela Haigian wrote in a Sept. 23 note. “This distinction is increasingly important as the stock debate moves beyond the initial return to growth halo.”

In the Wednesday note, Haigian boosted her price target on the car-seller but retained an equal weight rating. JPMorgan’s Rajat Gupta issued a similar call inflating his target and estimates and maintaining his neutral stance the week prior. Gupta said that CarMax is reaping the benefits of “a combination of supporting industry backdrop and company-specific execution” though there are “more proof points needed.”

Haigian and Gupta are not standing on the sidelines alone; despite the recent rally, 16 of the 21 analysts tracked by Bloomberg recommend holding the stock.

As CarMax’s stock has surged, its peers haven’t been so lucky. Shares of online auto retail giant Carvana Co. have tumbled 23% year-to-date. AutoNation Inc., Asbury Automotive Group Inc., Group 1 Automotive Inc. sank 19%, 20%, and 36%, respectively, over the same period.

Meanwhile, CarMax’s forward price-to-earnings ratio hovers around 19, more than double 2025’s nadir. On that basis, CarMax stock is a more expensive buy than the Magnificent Seven chip titan Nvidia Corp.

Mark Hackett, chief strategist at Nationwide Funds Group, said the company’s results can provide a read-through on whether interest rates and oil prices are tightening wallets on the lower end of the so-called “K-shaped” economy.

CarMax and other purveyors of used vehicles, in some ways, can stand to benefit from consumer weakness; buyers on a budget are more likely to consider cheaper, pre-owned options when shopping for cars. However, if customers become too constrained, they’re less likely to purchase big-ticket items at all, according to Michael O’Rourke, chief market strategist at JonesTrading Institutional Services LLC.

“The earnings calendar is sparse,” O’Rourke said. “Any management commentary on the consumer is valuable insight in such a fluid environment.”